The 25-year-old came through the youth system with the Vixens and was named the club's Players' Player of the Season for 2017-18.
Matthews is also able to play in midfield and gives Neil Redfearn more options as he strengthens his squad ahead of the new season.
"I have spent my whole career at Bristol City Women so this was a big decision for me to make but once I heard about the interest from Liverpool Ladies it was a no-brainer," she said.
"It is a fantastic club with real ambitions to challenge for trophies so I am really excited for the future.