The 20-year-old forward has previously spent time at Wigan Athletic and Wolves and was part of the England side that won the Under-20 World Cup earlier this year.
"Fulham's a massive club and they're definitely not a team that should be in the Championship," Ojo said. "So my main aim will definitely be to come in and help get us back in the Premier League."
Chairman Tony Khan said: "I'm delighted to welcome Sheyi Ojo to the Fulham Football Club. I've had the pleasure of spending time with Sheyi and his family, and I've seen first-hand what a tremendous work ethic Sheyi has both on and off the pitch.
"He possesses fantastic physical talents and also carries himself with poise and class, and I know that he's going to be a great addition to our squad."
Ojo - a product of the MK Dons youth system - has made 13 appearances for Liverpool in all competitions, scoring one goal.
Fulham has started the season with three consecutive draws against Norwich City, Reading and Leeds.