The Reds' captain will remain at Anfield for quite a few years.
The England international is delighted to secure his future at his boyhood club following a difficult start to the season where a groin injury has limited him to just 10 games so far this campaign.
Gerrard has been at the club since the age of eight and signed his first professional deal with the Reds in 1997. In this time with the club he famously lifted the Champions League Trophy in 2005 and also guided the club the success to success twice in the FA Cup and League Cup.
He told the club's official website: "I'm very happy. It's a very proud day for myself and my family.
"It comes on the back of a fantastic team performance last night when we got the result we were looking for. Hopefully we can finish the job off in two weeks time and take all of our magnificent fans down to Wembley for a day out.
"The contract extension coming the day after has been the icing on the cake so it has been a perfect 24 hours.
"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. 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."
Gerrard has also been handed an ambassadorial role by the club to take up when he retires from the game, which he feels honored to do so.
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.
"I'll know myself when it's time to hang my boots up and then hopefully I can stay involved with the club and set the right example for youngsters coming through."Follow GOAL.COM USA on