The 52-year-old joined Liverpool from Borussia Dortmund in October 2015 and has enjoyed plenty of success in his current role.
He won the Champions League with the Reds last season and his team is currently eight points clear at the top of the English Premier League as it bids for a first league title since 1990.
“For me personally this is a statement of intent, one which is built on my knowledge of what we as a partnership have achieved so far and what is still there for us to achieve,” Klopp told the club website.
“When I see the development of the club and the collaborative work that continues to take place, I feel my contribution can only grow.”
He added: “When the call came in autumn 2015, I felt we were perfect for each other; if anything, now I feel I underestimated that. It is only with a total belief that the collaboration remains totally complimentary on both sides that I am able to make this commitment to 2024.
“If I didn’t I would not be re-signing. This club is in such a good place, I couldn’t contemplate leaving.”
Liverpool assistant managers Peter Krawietz and Pepijn Lijnders have also agreed to a contract extension.
Klopp has breathed new life into the club since his arrival and spent millions forming a formidable team boasting an array of world-class talent.
At the same time, he has also nurtured academy graduates such as Joe Gomez and Trent Alexander-Arnold into the first team.
Champions League finals and more
He has guided the club to two consecutive Champions League finals and Liverpool finished second behind Manchester City in the league last season. Liverpool tallied a whopping 97 points though City was one point better.
But barring a sizable blip, the title drought looks like it will end.
“We feel this represents one of the big moments of our stewardship of Liverpool Football Club so far as we believe there is no better manager than Jurgen [Klopp],” said owner John Henry, chairman Tom Werner and FSG president Mike Gordon, in a joint statement.
“The decision also keeps with the club’s overall strategy of building from a position of strength.
“It means Jurgen will oversee the ongoing transition from Melwood to the new Kirkby training base as the club continues to pursue a vision of being elite in all facets of the industry.”
Liverpool still remains in all competitions this season and thus faces a congested fixture list over the festive period.
In particular, Klopp must prepare for two games in just 24 hours, with both the English League Cup quarterfinal and FIFA Club World Cup being played on different continents.
Liverpool next faces last-place Watford at home in the English Premier League on Saturday.