The Reds captain is expected to stay with the Merseyside club following the end of his playing days as the 31-year-old has also been offered an ambassador role for when the time comes to hang up his boots.
"I'm very happy," Gerrard told the club's official website. "It's a very proud day for myself and my family. This is the club I love and is the club I have supported since I was a young boy. I am living the dream as the captain of one of the biggest clubs in the world.
"I love coming to work every day and the experiences I have had since I was eight years of age and first signed for the club, I wouldn't change them for the world. To extend that and to hopefully have some more good times in a red shirt is what I want.
"There will be more highs and lows, there's no doubt about it as that's part and parcel of being a football player at a top club. The important thing is that you react well to the lows and experience more of the highs."
The England international is confident that the Premier League side are on their way to becoming a force in Europe again under the ownership of Fenway Sports Group.
"I'm confident moving forward that the club is going in the right direction. We've got a fantastic team, we've got the right owners in place and the right team behind our team, so I'm really confident we'll have more good experiences in the future," he added.
"It's really flattering for me that the club have offered me the chance to stay when I eventually hang my boots up. Hopefully that will be in many years to come because I want to play for as long as I can."
The midfielder has racked up 393 appearances for Liverpool in his career at Anfield so far.