Williams has been capped 38 times by Wales and will replace England wing Chris Ashton, who is joining Toulon.
Williams, 25, has been capped 38 times by Wales and will replace England wing Chris Ashton, who is joining Toulon.
"Liam's arrival at Allianz Park next season is fantastic news," Saracens rugby director Mark McCall told the club website.
"He is only 25 years old and has his best years of rugby ahead of him. Liam is arguably one of the most talented backs in Europe, so to have secured his signing is a real coup for the club."
Williams, equally effective at wing or full-back, will now be dependent on a wildcard from Wales head coach Warren Gatland if he is to continue his international career.
The so-called Gatland's Law restricts the number of players the Wales boss can pick from outside the four Welsh regions.
"I am really excited about joining Saracens and having the opportunity to challenge myself in the Aviva Premiership," said Williams.
"The club's reputation speaks for itself and I am looking forward to the next chapter of my career.
"I wouldn't be the player I am without the incredible support from the Scarlets' management, players, back-room staff and passionate supporters.
"I will be giving my all for the remainder of the season and hope to help finish on a high."
Scarlets general manager of rugby Jon Daniels said the Llanelli-based club had "fought hard" to keep Williams but "respect totally" his decision to move on.
"Liam has been an asset to the region and will be missed both on and off the field," Daniels said in comments published on the Scarlets website.
"He will always be a Scarlet and we thank him for his total commitment and passion for the region."