The contract extension, which Goal understands to be a five-year deal with improved wages, comes on the back of his exploits last season while on loan at Belgian top-flight outfit Royal Excel Mouscron.
Awoniyi found the back of the net 10 times - including two goals to help Mouscron qualify for a Europa League play-off spot - and laid on seven others in 31 games across all competitions.
The feat placed him just behind the deadly trio of Mohamed Salah, Roberto Firmino and Sadio Mane respectively in the club’s goalscoring chart in the 2017-18 season.
Awoniyi joined the Reds from Imperial Soccer Academy in 2015 and, prior to 2017-18 season, was sent on loan twice at FSV Frankfurt and NEC Nijmegen.
Speaking with club website, the former U17 World Cup winner - who had two years left on his previous contract - said: “I feel excited and I feel very happy.
“It has been three years since I first came to Liverpool. So far, so good. The last year was the best for me, it has been an amazing year so far.
“I just have to keep working hard each year and I believe one day the dream will come true.
“Thanks to my family, who have been so supportive. I’m very glad and excited about this contract and hopefully to have an even better year.”
The youngster is yet to secure a UK work permit to feature in Jurgen Klopp’s plan next season and, thus, would continue life off Merseyside - a fourth loan spell.
Suitors, however, are on his trail, with Belgian top-flight sides jostling for his signature. And Liverpool, Goal understands, will only agree to a loan agreement that would ease their plan of bringing him up to the pace of top-level football.