The international music show will take place at the Liverpool Arena, culminating in the grand final on Saturday May 13.
Glasgow and Liverpool had been whittled down to the final two potential host cities after beating off competition including Birmingham, Manchester and Newcastle.
Graham Norton, who hosts the BBC’s coverage, revealed the host city during a special edition of The One Show on Friday evening.
It also saw the EBU unveil the official logo for the 2023 contest containing the Ukrainian flag within a heart, reflecting that the show is taking place in the UK on behalf of the country.
For the first time, the two semi-finals on Tuesday, May 9 and Thursday, May 11 will also be shown on BBC One as well as the iPlayer.
Ms Sturgeon congratulated the winning city in a tweet, adding: “You’ll no doubt do Eurovision and Ukraine proud”.
A spokesperson for Glasgow City Council said: “Naturally, we are disappointed not to have been selected, but we are very proud to have made it to the final two cities and we wish Liverpool every success as they prepare to host Eurovision 2023.
“Glasgow remains a firm supporter of Ukraine and we look forward to watching Liverpool deliver a celebration of Ukrainian culture.”
The UK is hosting Eurovision next year on behalf of Ukraine, whose Kalush Orchestra won the event this year.
Kyiv would normally be welcoming the world to its stage in 2023, but this has been deemed not possible because of the Russian invasion.
It was decided the UK would host the 67th Eurovision Song Contest, as Sam Ryder came second in the competition.
This will be the ninth time the UK will have hosted the competition, more than any other country.
Scottish Secretary Alister Jack reacted by saying: “Glasgow presented a really strong bid, and I know people across Scotland will be disappointed not to be hosting the contest this time round.
“However, I have every faith that Liverpool will put on a fantastic show that the whole UK will get behind, honouring the people, culture and creativity of Ukraine.”
Culture minister Neil Gray said: “Although we are disappointed Glasgow’s bid to host the 2023 Eurovision Song Contest was not successful, we wish Liverpool well with hosting next year’s event on behalf of Ukraine.
“I’d like to take this opportunity to thank Glasgow City Council for all their work on this bid.”
He added: “Scotland continues to stand with the rest of the UK, Europe and the world, in condemnation of Russia’s unprovoked invasion of Ukraine.
“Since the conflict began, more than 20,000 people with a Scottish sponsor has arrived, representing 20 per cent of all UK arrivals – the most per head of any of the four nations.”
Glasgow City Council leader Susan Aitken added: “Massive congratulations to Liverpool, a great city.
“Now gie it laldy for Ukraine.”
Prime Minister Liz Truss congratulated Liverpool, tweeting: “A welcoming city with a proud musical heritage, Liverpool will put on an unforgettable show which celebrates the rich culture and creativity of Ukraine.”