The Spanish midfielder has wanted by the Reds all summer, but there were concerns that Jurgen Klopp’s side earlier refused to meet Bayern’s asking price.
But according to Fabrizio Romano via The Athletic, the deal has now been agreed between the two parties.
Thiago Alcantara was instrumental for Bayern Munich last season and he lead the team to a treble.
Premier league champions Liverpool, were superb in the 2019/20 campaign and kicked off the new season with a dramatic 4-3 win over newly-promoted Leeds United.
The English champions have been criticized by both fans and pundits for the lackluster attitude showed so far in the transfer window, but the reds will now hope to booster their midfield for the 2020/2021 season.