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Real Madrid have confirmed a £10million deal to sign the 26-year-old a month ahead of schedule, ensuring he can participate in the Club World Cup for Xabi Alonso's squad.
Although his contract with Anfield was set to run until June 30, he will be introduced by the La Liga titans on June 1.
18 jerseys, currently worn by Luka Modric, Lucas Vasquez, and Jesus Vallejo, may become available as their contracts are set to expire this summer.
Modric's departure has been confirmed, with the former Tottenham Hotspur midfielder set to leave following the Club World Cup.
On 5 May, he announced his departure from Liverpool at the end of his contract, shortly after the Reds clinched the Premier League title.
Despite initial expectations that Liverpool would not receive any compensation due to the Bosman ruling, they have managed to benefit from Real Madrid's eagerness to include him in the Club World Cup.
It is understood that Real Madrid will fork out £8.4m to the Merseyside club, with the total package amounting to £10m after covering the defender's wages for the final month of his contract.
When Alexander-Arnold announced he was leaving, the news was met with considerable hostility from Liverpool fans.
On 18 June, Real Madrid are set to face Al-Hilal in the group stage of the Club World Cup, followed by further matches against Pachuca and Red Bull Salzburg.
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