The 22-year-old forward, currently on World Cup duty with Spain, completed his medical at the Spanish national team's base in Tennessee and has signed a long-term contract at Anfield.
Munoz becomes the first addition of manager Andoni Iraola's era and will join his new team-mates later this summer once his involvement in the tournament is finished.
He made 34 appearances for Osasuna in 2025-26, scoring seven times and providing five assists across all competitions.
The attacker scored on his Spain debut, netting against Serbia in a March friendly to earn his second international cap, and is expected to be involved in Spain's second World Cup group game against Saudi Arabia in Atlanta.
Munoz moved to Osasuna last summer from Real Madrid, where he had made four first-team appearances after graduating from the club's academy. His earlier career development came at the academy of his hometown club, Barcelona.
The signing is Anfield's second addition ahead of next season, following a deal for Jeremy Jacquet agreed earlier in the year.
The Reds moved to sign Munoz ahead of Newcastle United, who had also been in dialogue with the forward before Liverpool hijacked the deal and agreed a fee of £34.5m with Osasuna.
Iraola is known for his relationship with Spanish football, having managed Rayo Vallecano and Athletic Club before moving to England, and Munoz fits the directness and intensity the manager demands from his wide players.