Gomez had been linked with a move away from Anfield after making only 21 appearances last season.
The 25-year-old has fallen behind Virgil van Dijk, Joel Matip, and Ibrahima Konate in Jurgen Klopp’s list of preferred center-backs.
Gomez has also endured serious knee and ankle injuries since joining the Reds in 2015.
But Klopp remains confident Gomez still has a big part to play after extending his spell on Merseyside.
“One of the many wonderful things about Joe is he has the experience and youth, that’s not a bad combination,” Klopp said.
“He has not long turned 25 but he was at the club before I was. The best thing of all is that his best years are still to come, and I could not be happier that this will happen with us.”
Gomez, who was signed by Charlton, has helped Liverpool win the Champions League, Premier League, FA Cup, League Cup, and FIFA Club World Cup.
Added Gomez: “It is an incredible location. In my opinion, one of the top clubs in the world right now, if not the best.
“Really, it wasn’t hard to decide to extend my stay here when the possibility presented itself.
“Despite the fact that I have been in this place for a while, I still feel youthful and my greatest years are yet to come. I still have time and room to learn more.”
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