Kewell, who played alongside Milner at West Yorkshire outfit Leeds United, is confident that the England international will be a success at Anfield.
"I think it's a good signing," the former Australia international told Liverpool’s official website.
"James obviously came through when I was at Leeds and I always knew he had that kind of talent. He's got that grit between his teeth, first and foremost. He's got that hunger and desire.”
"For Liverpool to snatch him up, I think he's going to do wonders,” added Kewell. "I think he can come in there and get respect straight away off the players because he's been there and done it - he's won titles, so he knows what it takes.”
Milner is a hard-working footballer who may not be the most technically gifted, but he will certainly get the job done.
The England international midfielder moved to City from Aston Villa in the summer of 2010, and won two Premier League titles, an FA Cup and the League Cup during his five years at the Etihad Stadium.
The 29-year-old was never guaranteed a place in the starting line-up at City, and it made sense for him to leave Manuel Pellegrini’s side for Brendan Rodgers’s team.
In the recently concluded 2014-15 season, the former Newcastle United midfielder scored five goals and created 52 chances in 32 Premier League appearances.
Milner had a pass accuracy of 79% and a shot accuracy of 41%, and won 36 headers, 19 dribbles and 45 tackles.
Liverpool will be aiming for a top-four finish in the Premier League next season, and the Englishman will play a major role in that.