The Spanish winger joined the club's youth system in 2010, but spent last season on loan with Almeria, where he featured in 33 matches.
The 20-year-old told the club's website: "I really want to be here and play for Liverpool and I'm trying to do my best every day in training and show the manager what I'm capable of.
"I learned a lot during my loan spell and I was playing regular football. I'm not really a young player anymore so I've got more responsibilities now and I will work as hard as I can to try and get a chance.
"I've been waiting so long now to score a goal for Liverpool. Last season while I was on loan in Spain I was watching Liverpool play on the TV and wanting to score a goal for them and now I've got one."
Suso opened his account for Liverpool during their 2-1 win over Preston North End in a pre-season friendly this weekend.