Thiago was initially expected to miss out with the Achilles problem he sustained against Wolverhampton Wanderers on the final day of the Premier League season, but scans did not reveal any significant damage.
The Spaniard therefore rejoins the engine room alongside Jordan Henderson and Fabinho, who had already declared himself fit for the showpiece event before fully recovering from his hamstring injury.
Mohamed Salah has also been declared fit to line up in the final third alongside Sadio Mane and Luis Diaz, as the January arrival forces Diogo Jota and Roberto Firmino to take their spots in the dugout.
Joe Gomez, Thiago and Fabinho's returns means that Divock Origi is the only absentee for Liverpool through injury, and the Belgian striker has therefore played his final game for the club ahead of his imminent departure.
Liverpool starting lineup: Alisson; Alexander-Arnold, Konate, Van Dijk, Robertson; Fabinho, Henderson, Thiago; Salah, Mane, Diaz
Subs: Kelleher, Gomez, Matip, Tsimikas, Milner, Jones, Keita, Elliott, Oxlade-Chamberlain, Minamino, Jota, Firmino
Real Madrid starting lineup: Courtois; Carvajal, Militao, Alaba, Mendy; Kroos, Casemiro, Modric; Valverde, Benzema, Vinicius Jr
Subs: Lunin, Marcelo, Nacho, Ceballos, Camavinga, Isco, Lucas, Hazard, Asensio, Bale, Rodrygo, Mariano body check tags ::