The Croatia international moved to Anfield from Southampton in July 2014, and has been a part of manager Jürgen Klopp’s first team plans this season, though has been hampered by injury.
The 27-year-old is understood to have seen his wages increased to £100,000-a-week after putting pen to paper on a four-year extension.
“I think this is one special day for me and my family,” Lovren told Liverpool’s club website.
“I think I am the happiest guy [in the world] today, it’s another dream come true. It was always my dream to stay as long as possible at one club that I love – and that is Liverpool.
“After all that happened in the beginning, in the last two seasons I think I’ve done better than in the first season. The club has rewarded me, they believed in me and also the fans, and this is what I respect a lot after everything that happened.
“I am pleased with everything and I just want to stay here as long as possible and be a part of this family for many, many years to come.”
Lovren has made 100 appearances for Liverpool in all competitions since arriving from Saints in 2014, and has scored four goals for the club, two of which have come this season. The Croat has been Klopp’s favoured partner for Joel Matip in defence, and Liverpool have only lost one match out of the 15 that the two centre-backs have played in this season.
“I am glad I will be a part of this team and this plan for the future,” Lovren added. “We are a really talented team with many special players, an amazing manager, the club is fantastic [and] the supporters are always behind us even on the bad days, which is the most important thing. I am definitely excited about the future.”
Lovren has started five consecutive matches since returning from a knee injury in March that kept him out for a month.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies