Alcantara is likely to leave Bayern Munich this summer with a year left on his contract and the Premier League outfit have been linked with a move for the Spain international.
Liverpool ended their 30-year wait to be crowned English champions in emphatic fashion in the 2019/2020 season but Jurgen Klopp has been hesitant in strengthening his title-winning squad, with defender Kostas Tsimikas the only arrival so far.
Redknapp believes Alcantara, who he labeled as one of the best midfielders in the world, would improve Liverpool to defend their league title in the upcoming season.
"We've often spoken about how good Liverpool's midfield are, how hard-working they are, but sometimes they maybe lack that bit of finesse and that little bit of quality," the Sky Sports pundit said.
"Thiago would give them something completely different, he's one of the best midfield players in the world. He dictates the play, plays at his own pace.
"Sometimes, especially when you go to tough places in the Premier League, you cannot beat teams by going 100 mph all the time, you need a little bit of finesse and for someone to do things differently.
"Many years ago Liverpool had midfield players like Ronnie Whelan and Jan Molby who could just slow the game down and play at a tempo that suited them, Thiago could do that.
"We saw him in the Champions League final where he completely bossed the game, had so many touches of the ball and made the game look easy."
Redknapp played for Liverpool between 1991 and 2002 where he won three trophies before joining Tottenham Hotspur.
