The 33-year-old had been widely tipped for a move back to his home town to be closer to his family and a two-year contract was agreed after he passed a medical on Thursday, chief executive Alan Whiteley told the club's website.
"I am sure that Liverpool will agree that their loss is this football club's gain and the Craig's return will be met with huge excitement and enthusiasm by all Cardiff City fans - and as the perfect backdrop to the start of the new season," he said.
Whiteley said manager Malky Mackay had been very keen to bring Bellamy back to the club.
"I would also like to thank our manager for his tenacity and single mindedness in ensuring the transfer could take place - and for making my life a misery until such time as it could be completed.
"And of course to Brendan Rodgers and Liverpool Football Club; their assistance and support during the process of negotiations have been conducted in an extremely professional and amicable manner."
No fee was mentioned.
Bellamy, who played for Britain at the London Olympics, spent time at Cardiff on loan in the 2010/11 season after falling out with management at Manchester City.
He scored 11 goals in 35 appearances during that spell.
He has played for seven clubs, not including loan moves, and had previously joined Liverpool in 2006 before returning on a free transfer last year.
Bellamy was included in the Wales squad to play Bosnia-Herzegovina in an international friendly next Wednesday.
