"Ryan was our first-choice attacking player. He strengthens our squad also with his experience despite being only 24 years old," said coach Marco Pezzaiuoli.
Manager Ernst Tanner added on the club's official website: "We are very proud to be able to sign in Ryan Babel an internationally-experienced player from a top club like Liverpool.
"We are convinced that he is a big gain for us with his character traits and his sporting qualities."
Commenting on the move, Babel was looking forward to the challenge ahead with the new side.
"I am looking forward to my new mission in Hoffenheim," he said.
"My first impressions are absolutely positive. I hope now to be able to quickly get into the team."