The versatile 26-year-old has agreed a two-year contract with the option of a third year.
Although earmarked as a defensive midfielder by Livingston, Obileye finished joint-second top goalscorer in the Scottish Championship this season with nine goals in 27 games, second only to Liam Boyce of Hearts.
Obileye joined Queens in September following four seasons in the National League with Eastleigh, Dover and Ebbsfleet. He had previously been on the books of Sheffield Wednesday and Charlton and had two loan spells with Dagenham & Redbridge.
Livi boss David Martindale said: "I am delighted that Ayo has chosen Livingston over a number of other Premiership clubs who were also chasing his signature. He has been a target for us for a large portion of the season.
"He's aggressive in both boxes and can play as either a central defender or holding midfielder which I really like about him.
"He chips in with his fair share of goals - and not all coming from set plays.
"He has good feet, reads the game well and has a very good range of passing.
"He is a player I feel we can make better and has all the attributes to play for us now - very robust and physically up to the challenge having already played at a decent level in the UK throughout his career.
"I'm really, really happy to get this one over the line and would like to thank Ayo and his agent, Phil, for choosing Livingston."