The 21-year-old Argentinian, who joined the Reds from Lanus in 2007, was granted an Italian passport last summer but it was later revoked.
Leto arrived in Athens late on Monday night to complete a medical and put pen to paper on a two-season deal with the Greek champions.
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Farmed out: Leto (left) only arrived at Anfield last summer
'Olympiackos is a challenge for me. I know I will be here for two years," Leto told his new club's website.
'I've had two weeks of pre-season training with Liverpool and I believe I will be ready to do whatever I have to.
'Olympiakos are a great team who challenge for every honour in Greece and in the Champions League.
'The team has some good players, a well known coach and fanatical supporters which always inspires them.'
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