The youngster will stay at Stadium:MK until February 23 and goes straight into the Dons squad to face Leyton Orient on Tuesday.
Manager Karl Robinson is delighted to have signed the highly-rated forward.
"I'm made up to be able to bring David here and I'm extremely grateful to Kenny Dalglish and Frank McParland at Liverpool for their help in making it happen," he told the club's official website.
"David will bring us genuine pace and explosiveness high up the pitch, which is something we have lacked at times this season. We have players with strength and guile and we're looking for those with the raw pace to compliment it.
"He'll be a very exciting addition to the squad and a player I know our fans will enjoy watching."