Lloyd Jones has left Liverpool and joined Luton for an undisclosed fee.
Jones, who had six months remaining on his contract at Anfield, has signed a two-and-a-half year deal at Kenilworth Road.
The 22-year-old resisted interest from former team Plymouth and Scottish Premiership side Hearts to complete the move to the Sky Bet League Two leaders.
Transfer Talk: Aubameyang the catalyst?
The panel discuss whether Pierre-Emerick Aubameyang will be a catalyst for Arsenal.
He said: "I found out the move was a possibility about three days ago, it got followed up and here I am today.
"I want to play regular first-team football. I've been in the U23s at Liverpool for quite a while now and I wanted a new challenge, and I thought Luton was the right club for me."
Luton boss, Nathan Jones, added: "We were looking to bring some defensive cover in for the short-term with Scottie Cuthbert being out and Johnny Mullins picking up an injury, but when Lloyd became available, he's one that we'd earmarked as being able to take forward longer term.
"He's young enough that we can improve him and develop. He's got good pedigree and has had some good loans already, and he's one we believe can progress with the club."
Jones, who has represented Wales and England at youth level, spent last season on loan at Swindon, scoring twice in 24 appearances.
He has also spent time on loan at Cheltenham, Accrington and Blackpool.