
Albert Riera has signed a four-year contract with Liverpool for a fee believed to be in the region of £8m.
The Spaniard 26 , a left winger was also wanted by rivals Everton.
He played on loan with Manchester City in 2006 and has also played for Real Mallorca and Bordeaux before joining Espanyol.
Rafa Benitez said of his new signing "Riera has the qualities we were looking for. He's a left footer who normally plays on the left wing."
"He's good in the air, strong, powerful and a good crosser of the ball."
"He's the kind of player we have been talking about. He can beat players and get good deliveries into the area for our strikers."
Earlier Liverpool signed Brazilian striker Vitor Flora on a free transfer.
The 18-year-old spent last season playing in his homeland with Botafogo and has signed a two year contract.
Liverpool have also completed the permanent signing of Hungarian goalkeeper Peter Gulacsi, 18, who was on-loan at Anfield last season.
Gulacsi had spent 12-months in Liverpool's reserves after joining from MTK Hungaria.