Personal terms have been negotiated and the 29-year-old will join on a free transfer on July 1 after his contract expires at the Etihad Stadium.
James Milner
Born: 4 January 1986
Clubs: Leeds United, Newcastle United, Aston Villa, Man City
England debut: v Netherlands 12/08/09
England caps: 53
England goals: 1
The England international, who has won 53 caps, will add some much-needed experience to a midfield which, for the first time in 17 years will be without captain Steven Gerrard as he begins a new career in Major League Soccer with Los Angeles Galaxy.
"Liverpool Football Club are delighted to announce they have agreed a deal to sign Manchester City's James Milner, subject to a medical," the club said a statement.
"The Reds have agreed personal terms with the England international, who will join the club on a free transfer on July 1 after his contract at the Etihad Stadium has expired."