Aquilani, 28, joined Liverpool from Roma in 2009 during Rafael Benitez's reign, but he struggled with injury in his debut campaign and spent the following two seasons on loan with Juventus and AC Milan.
New Reds manager Brendan Rodgers had indicated he would be happy to accommodate Aquilani this season, and the player's agent insisted on several occasions that he would spend the campaign at Anfield, but he has now completed a move to Fiorentina..
A statement on the Reds' official website read: "Liverpool Football Club can today confirm that Alberto Aquilani has completed a permanent transfer to Serie A side Fiorentina.
"The Italian midfielder joined Liverpool in 2009 but made just 28 first-team appearances having spent the last two seasons on loan in his homeland. Everyone at the club would like to wish Alberto all the best for the future."
Francesco Della Rocca, who signed for Fiorentina on loan on August 1, believes Aquilani will be a fine signing.
"Alberto is a great player and will do very well with Fiorentina," he said. "He wants to redeem himself after having a less than positive experience with Liverpool. I am convinced that the move to Florence represents a great opportunity to do that."
Fiorentina have also agreed the signings of defender Gonzalo Rodriguez and midfielder Borja Valero from Villarreal.
Argentina international Rodriguez, 28, is still to agree personal terms but Valero, 27, has now completed the formalities of his switch.
Villarreal said on their official website: "Villarreal and Fiorentina have reached an agreement for the transfer of Argentinian defender Gonzalo Rodriguez, who will play next season with the Italian club.
"Midfielder Borja Valero has successfully passed the medical examination and signed his contract with the Tuscan club, so he is officially a Fiorentina player too."
Rodriguez said he would miss Villarreal, having joined the club from San Lorenzo in 2004.
"Everything went very fast and my signing with Fiorentina was closed in no time, but Villarreal is my home and I want to say goodbye as it deserves," he said. "There were eight precious years in which I have experienced many things in this club, so I promise to return next week to say goodbye."
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