Shortly after his appointment as Liverpool manager in October 2015, Klopp described Brannagan as having "everything you need" in a midfield player and fielded him in the, Europa League, FA Cup and League Cup later that season.
Brannagan, who joined Liverpool as a five-year-old, made his Reds debut in 2015 and went on to make eight further appearances for the first team.
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Brannagan has completed a medical with the League One outfit and signed a three-and-a-half-year contract, with the U's now managed by former Swansea City assistant Pep Clotet.
The 21-year-old spent the second half of last season on loan at Fleetwood Town where he helped Uwe Rosler's side reach the League One play-offs.
He said: "My agent came to me and said "Oxford are really keen".
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Clotet said: "Cameron is a player with huge potential and someone that a lot of clubs have been monitoring for a long time".
However, the Salford-born youngster has since failed to add to his total of nine senior appearances and was left out of Klopp's squad for Liverpool's pre-season tours of Hong Kong and Germany last summer.
"We believe that he will be an excellent fit for what we are building here".
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