The 22-year-old Dutchman joins the Bees on a five-year contract after turning down interest from a number of other clubs, including German champions Bayer Leverkusen.
Brentford will pay an initial £20m fee, with an additional £5m in add-ons, while Liverpool have a 17.5% sell-on clause.
Bees boss Thomas Frank said the defender was a “great signing” for the club.
“Sepp is a centre-back with a good level and he has the potential to develop even further,” he added.
“He fits our culture and the way we want to play – he is quick, he reads the game well and is composed on the ball in the build-up and in the decisive defending actions.
“Sepp is a great character, and I am convinced that he will fit in well with the group and help us to push forward.”
Van den Berg made 33 Bundesliga appearances on loan at German club Mainz last season.
He joined Liverpool from Dutch side PEC Zwolle in 2019 but made only four senior appearances for the Reds, having also spent 18 months on loan at Preston North End.
