The two clubs reached an agreement for the Uruguay international on Monday.
Nunez has signed a six-year contract at Anfield and has been given the number 27 jersey.
Nunez scored in each leg when Benfica faced Liverpool in the UEFA Champions League quarterfinals last season.
The former Penarol striker joined Benfica from Almeria in September 2020 and scored 34 times across all competitions last season.
Speaking to his new club's website, Nunez said: “It’s a pleasure to be here in Liverpool and I’m very happy to be a part of this great club.
“I’ve played against Liverpool and I’ve seen them in lots of games in the Champions League, and it’s my style of play. There are some great players here and I think it’s going to suit my style of play here.
“As I say, I’ve watched quite a lot and it’s a very big club and I hope I can give everything that I’ve got in order to help the team.
“When I arrived at the training ground, I was really surprised to see the set-up and the structure and all the trophies here.
“You can then imagine yourself winning more trophies and then later on when you come here again and see the trophies on display, you can say, ‘Look, I was a part of that, I was there at that time, winning trophies.’
“That’s one of the reasons why I came here to Liverpool – to win trophies and titles. I want to win a lot of trophies at Liverpool.”
Nunez is the third Uruguayan to sign for Liverpool after Luis Suarez and Sebastian Coates.
