The 21-year-old, who has captained England at Under-20 level, arrives at the John Smith's Stadium on a three-year contract, with the club having an option to extend his stay for another season.
Coady has featured in Liverpool's pre-season programme and Huddersfield manager Mark Robins expressed his delight at what he considered to be something of a coup for the Championship club.
"We've been looking at Conor's development very closely for the last two years at Liverpool and then during his loan move to Sheffield United," said manager Mark Robins.
"We have been patient in waiting for the right opportunity to bring him to the club, but sometimes that will take a long time - in some cases it may never happen. We are delighted that our work has now come to fruition.
"We know all about his qualities and we are delighted that we can welcome him to Huddersfield Town today.
"Conor will come in and make an immediate impact on our first team, but at 21 years old he still has the capacity to improve further."
Coady made two senior appearances for Liverpool before spending last season on loan at Sheffield United in League One and his arrival comes as fellow midfielder Adam Clayton looks set to leave Huddersfield to join Middlesbrough.
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