The Premier League outfit have refused to reveal the length of the extension, but it is believed to be a new two-year deal that will tie Gerrard to his boyhood club until 2015.
Speaking about his new terms, the 33-year-old midfielder told the club's official website: "It lets me know the club thinks an awful lot of me and want me here. There was a year left [on my contract] which was quite unusual. I think it was the first time I've got that far down into a contract.
"I'm glad it's all done and it's happened at the right time before the season, so I can just focus on playing as well as I can for the next two years. I don't want to be talking about myself or my contract situation going into a season.
"The contract was first mentioned by the manager in March and in a couple of interviews I was asked quite a bit about the contract. It takes your mind away from the football, so fair play to the club - the timing is spot on. It's all done and dusted and now I can just focus on the football side."
Since he broke into the side in 1998, Gerrard has made 630 appearances for Liverpool, scoring 159 goals in the process.