Comolli's appointment is the first one made by the club since New England Sports Ventures took control last month.
Comolli was previously the director of football at Tottenham, a role he held for three years before departing in 2008 and included signing current man of the moment Gareth Bale.
His most recent role was as director of sport with French side St Etienne and he only left that role earlier this week after a falling-out with chairman Roland Romeyer.
"I could not do my job properly, I had no problem with the technical staff but I had some with the club's chairman," said Comolli - who was linked with a move to Aston Villa to link-up with Gerard Houllier.
Speaking of his appointment at Liverpool, Comolli says he is delighted to be joining the club.
"I am delighted to be joining Liverpool and look forward to working with John [Henry - NESV principal owner] and Roy [Hodgson]," he said.
"I think we all realise there is a big job ahead, but we all share the vision that John has for rebuilding the club and bringing back the success that the supporters deserve."
Hodgson has welcomed Comolli's arrival, saying: "I am looking forward to working with Damien whom I have known for many years.
"We are engaged in an exciting project here and he will bring a lot to the table. We all want to see moves to strengthen the squad and support player development over the next few years. John Henry and I are totally united in delivering on that ambition."
John Henry was also pleased to confirm Comolli's appointment.
"Damien has a proven track-record of identifying exciting young footballing talent and we are delighted that he has agreed to join Liverpool," he said.
"Working closely with Roy Hodgson and the coaching staff, I know he will make a valuable contribution to strengthening the club and the squad as we move forward.
"Today's announcement is just the first step in creating a leadership group and structure designed to develop, enhance and implement our long-term philosophy of scouting, recruitment, player development and all of the other aspects necessary to build and sustain a club able to consistently compete at the highest level in European football.
"We intend to be bold and innovative. We will not rest until we have restored Liverpool Football Club to the greatness Liverpool fans expect."
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