"When I see the development of the club and the collaborative work that continues to take place, I feel my contribution can only grow".
"This club is in such a good place, I couldn't contemplate leaving", Klopp, 52, told Liverpool's website.
Liverpool lost only one game in the Premier League last season as they amassed 97 points but missed out on the title by a point to Manchester City.
Liverpool defender Virgil Van Dijk almost had an embarrassing moment 10 minutes from time when he side-footed a 20-yard back pass past Alisson and could only watch with relief as the ball trickled by the post.
Liverpool are leading the Premier League table with 49 points and they are 11 points ahead of the second placed, Leicester City, who face Norwich at King Power Stadium.
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They are chasing their first English top-flight title since 1990, and their 19th overall.
"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".
"When the call came in autumn 2015, I felt we were ideal for each other; if anything, now I feel I underestimated that".
The Liverpool FC manager steered the Reds to their first major trophy at the fourth time of asking thanks to a 2-0 victory over Tottenham Hotspur in the Champions League final. If anything, now I feel I underestimated that. This is the start of a busy week as they play Aston Villa in the League Cup quarterfinal on Tuesday and then their Club World Cup semifinals against on Wednesday in Qatar as Klopp will put out two separate teams.
"As we are sure our supporters would agree, it is truly wonderful news and we are all extremely thrilled, not only professionally, but personally too".
The in-form Egyptian took his tally for the week to three goals after finding the net from an nearly impossible angle on Tuesday night when the defending champions beat Salzburg 2-0 in the Champions League.