The 26-year-old joined the Reds from Gremio in 2007 and, after a tumultuous start to life in England, has since become a fan-favorite at Anfield.
His previous deal was due to expire in 2015, but the new contract will extend his stay on Merseyside and Lucas is delighted to have put pen to paper.
"It's another long-term contract that I have signed - but it was the same feeling as when I first came here," he told the club’s official website.
"I am really delighted to have the opportunity to play for this club. It's where I think I belong and where I wanted to stay, so I am very happy and looking forward to a few more years here.
"It was an easy decision because after the long period of my career I have had here, I would like to give the best of my time to this club."
Lucas tore his ACL in December 2011, but has since returned to become a vital part of the Liverpool side. He has made 20 league appearances in 2012-13.