The 22-year-old Welsh international becomes Brendan Rodgers' second signing as Liverpool boss, after attacker Fabio Borini.
Allen, who competed for Great Britain at the Olympics this summer, joins the Merseyside club after scoring four goals in 34 games under Rodgers in Swansea's debut Premier League season.
The midfielder will undoubtedly change the look of the Liverpool side, stepping straight into the starting XI.
Using the 4-3-3 formation Liverpool used in their 3-0 Europa League victory over FC Gomel, this is a look at how Joe Allen may affect the Reds first team.
The second-longest serving Liverpool player, Reina has made 355 appearances for the Merseyside club, and next season should be no different.
The Spanish Euro 2012 winner is Liverpool's first-choice goalkeeper, and is a key to Liverpool's success this season.
Arguably the only of Kenny Dalglish's signings from a season ago to assert himself in the Liverpool first team, Jose Enrique has no doubt been a pleasant surprise since joining from Newcastle for £7 million.
He enters the 2012-13 season expected to again be one of the Reds' steadier players on the back-end in his second full season with the Merseyside club.
Martin Skrtel was arguably Liverpool's most breakout player last season, emerging as one of the club's key players in an incredibly stingy defense alongside partner Daniel Agger.
The Reds conceded just 40 goals in 38 games last season, good for third best in the Premier League.
Skrtel was key, and he will hopefully carry his good form into the new season.
Rumours may be swirling about Daniel Agger's possible departure, but as of right now, he is still a Reds player, and as of right now, he is still key to any success the club might have.
Agger led the stellar defensive line last season, and is expected to continue his fine form alongside Martin Skrtel.
Provided he stays, that is.
Glen Johnson returns as Liverpool's most offensive promising defender, and the hope is that this is the season that the England international finally blossoms into an effective scorer from the back end.
Fans will hope "Johnno"'s impressive goal against FC Gomel in the Europa League is a sign of things to come.
The fan favourite will need to play well to fight off the advances of Martin Kelly fighting for first-team playing time, but if Johnson plays as well as he can, he will.
Lucas Leiva returns to the Liverpool lineup with much anticipation.
The Brazilian midfielder missed all but 15 games of the 2011-12 season after suffering a season-ending ACL injury in a League Cup clash against Chelsea, but he looked good on his home return against Gomel.
Lucas has established himself as one of the Reds' stronger players in recent seasons and is a key to the club's success.
The Reds could return to their best with Lucas back in the side.
The Liverpool legend returns.
The 32-year-old, who has made 583 appearances and scored 150 goals in his Liverpool career, is, when fit, arguably the Reds' most important player.
Gerrard comes into the new season healthy despite having played for England at Euro 2012, and he should be in full form.
The Reds captain will be critical to ushering in the new era at Anfield, and will, as always, be a fixture in Brendan Rodgers' first team.
Joe Allen is Liverpool's newest member, having completed his £15 million move from Swansea yesterday.
Brendan Rodgers, who managed Allen for two years at Swansea, will be hoping the 22-year-old Wales international and Great Britain Olympian, a tough-tackling midfielder who loves to come forward and can make clever passes, can fill the role of a box-to-box midfielder that Charlie Adam failed to last season.
Allen is already well acclimated to Rodgers' pass-and-move style, having spent two seasons with the new Reds manager in both the Championship and Premier League.
The transition should be seamless.
Expectations should be curbed for Allen's first season at Anfield, but over the long-term, the 5'6" midfielder can establish himself as one of Liverpool's more important players.
Joe Allen steps right into the first team for Liverpool, and should be a key component in Rodgers' first XI.
Liverpool's £10.5 million forward, Brendan Rodgers' first signing as the Reds boss, will step straight into the lineup.
The Italian, who has already twice played under Rodgers at Chelsea and Swansea, impressed against FC Gomel playing in a wide role, even scoring his first goal as a Red by way of a tidy finish in his home debut.
Could Fabio Borini be the goalscorer Liverpool so desperately needed last season?
Rumours are swirling that Andy Carroll may be set to be shown the exit door at Anfield, but as of right now, the 23-year-old native of Gateshead is still a Liverpool player.
He comes into the new season on form, having scored three goals in the 2011-12 season's last seven games, netting an important goal for England at Euro 2012, and scoring three goals in preseason.
Carroll will hope to keep his good form going, and with the new-look formation and dynamic wingers supplying him, he could finally fulfill his £35 million price tag.
The superstar that makes the Liverpool side tick.
Kenny Dalglish's £22.8 million signing, who scored 17 goals for Liverpool in his first full season with the club, will again be the man relied upon for much of the Reds' attacking hopes.
The 25-year-old Uruguayan, who captained his country at the Olympics, set up all three goals in the 3-0 second-leg win over FC Gomel in the Europa League, and looks reinvigorated with the acquisition of Borini having taken much pressure of his shoulders.
If Suarez plays well this year, Liverpool play well.
Luis Suarez is the final piece of the puzzle for a Reds side that could well challenge for a top-four place this season.