Salah's contract had been due to expire at the end of the season, however, he has now penned a new deal which will keep him at Anfield until 2027.
The Egyptian's extension stands as a major boost for Liverpool, who are currently heading towards securing their 20th top-flight title.
"Of course I'm very excited," Salah told Liverpool's club website. "We have a great team now. Before also we had a great team. But I signed because I think we have a chance to win other trophies and enjoy my football.
"It's great, I had my best years here. I played eight years, hopefully it's going to be 10. Enjoying my life here, enjoying my football. I had the best years in my career.
"I would like to say to (the fans), I am very, very happy to be here. I signed here because I believe we can win a lot of big trophies together. Keep supporting us and we'll give it our best, and hopefully in the future we're going to win more trophies."
Salah, who joined Liverpool from Roma in 2017, has recorded 27 goals and 17 assists in the Premier League this season to help give the Reds a healthy 11-point advantage at the top.
The campaign has been the most productive for the 32-year-old, who has taken his overall numbers for Liverpool to a staggering 243 goals and 109 assists in 393 appearances.
Salah has already won the Premier League title with Liverpool along with the Champions League, FA Cup, League Cup and FIFA Club World Cup.
Salah was one of three key Liverpool players who were set to be out of contract this summer, with defenders Virgil van Dijk and Trent Alexander-Arnold seeing their terms heading towards expiration.
Captain Van Dijk recently revealed there has been "progress" made regarding talks over a new deal.
The 33-year-old Dutch centre-back has been a mainstay in the Liverpool defence since arriving in 2018 and has played every minute of their Premier League campaign this term.
Meanwhile, Alexander-Arnold's future appears to be away from Merseyside, with the England right-back commanding heavy interest from Real Madrid.
Real have been long-term admirers of the Liverpool academy product and have been moving to ramp up their pursuit of a free transfer.