The 54-year-old German took charge of Liverpool in 2015 and has since led the Reds to their sixth Champions League title in 2019 and their first league title in 30 years in 2020.
Klopp’s previous contract as coach was due to expire in 2024. Liverpool have not announced when the new deal will expire.
“There is so much to love about this place,” Klopp said in a statement on the club’s website. “I knew that before I came here, I got to know him better after I arrived and now I know that more than ever.
“Like any healthy relationship, it should always be a two-way street; you should be a good fit for each other. Feeling so right about each other is what got me here in the first place and that’s why I extended it earlier.”
Assistant coaches Pepin Leenders and Peter Krawetz have also signed new contracts with Liverpool.
Since joining from German club Borussia Dortmund, Klopp has transformed Liverpool into one of the best football teams in the world.
In the Premier League, the Reds are one point behind Manchester City with five games remaining to play this season.
Klopp added: “There is still a novelty for us as a club and that encourages me.”
“I’ve always been here, our owners have been incredibly committed and energetic about this club and it’s clear that now applies to our future as much as I’ve known before.”