The England Under-20 midfielder, 19, becomes Rovers' second signing of the summer following the arrival of full-back Callum Brittain from Barnsley.
Morton made his senior Liverpool debut against Norwich in the Carabao Cup last October and started the Champions League victories over Porto and AC Milan.
He made his full Premier League debut for Jurgen Klopp's men in the 2-2 draw at Tottenham in December and has made nine appearances in total for the Reds.
Rovers director of football Gregg Broughton said: "We have had to wait patiently for Tyler, as he has been so close to Liverpool's first team for the whole of pre-season, but after seeing what he did in some big games for Liverpool last year, we believe he was worth waiting for.
"We are very grateful to Liverpool for trusting us with the continued development of a player who is rated so highly at the club."
Morton will link up with his new team-mates on Tuesday as Jon Dahl Tomasson's men, who beat QPR in their Championship opener on Saturday, prepare for next weekend's trip to Swansea.