The 52-year-old arrived at Anfield in October 2015 and lifted his first silverware with the club this year, winning the Champions League in June and the Super Cup in August.
Klopp has also taken Liverpool to the top of the Premier League this season - establishing an eight-point lead - making them odds-on favourites to win their first title since 1990.
After announcing his new deal, Klopp said: "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.
"When I see the development of the club and the collaborative work that continues to take place, I feel my contribution can only grow.
"People see what happens on the pitch as a measure of our progress and although it is the best measure, it's not the only measure.
"I have seen the commitment from ownership through to every aspect and function of the club you can think of.
"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 complementary 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. For anyone in football who aspires to compete in an environment where every element of the organisation is at its very best - from the support of the supporters to the vision of the owners - there can be no better place than this."
Klopp's assistants Peter Krawietz and Pepijn Lijnders have also extended their contracts with the club.