The 18-year-old, who debuted for the Reds at the age of just 16 years and 150 days, gained experience in the Women’s Super League last season and is a regular for England Under-19s.
The right-back is the fifth summer signing to arrive at Hibs with experience of the English game after goalkeeper Benne Håland, midfielder Ava Kuyken, forward Nor Mustafa, and defender Poppy Lawson.
Parry said: “I’m really excited to be joining the club and can’t wait to get started.
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“I’ve seen the team’s goals for this season and can’t wait to meet all the girls, get playing, and get started.
“I can’t wait to meet the fans and I just want to show them that I can give my all to help the team. Playing in front of them will mean everything.”
Head coach Dean Gibson added: “Lucy is an exciting signing for the club. She’s a young player with a huge future in the game. Although it’s only a loan we feel very fortunate to have her for the next 12 months. She’s a current regular in the England under-19s squad, which has a huge pool to select from, so it shows the level she is currently at.
“The club and fans should enjoy her while she’s around because I’ve no doubt she will be a regular in the Liverpool side in the coming years."
Parry is Hibs’ tenth signing of the summer and will bolster Gibson’s options in defence. She is the younger sister of Mia Parry, who plays for Huddersfield Town Women.