The move will end speculation over the 27-year-old's future having been linked with clubs such as Manchester City and Fiorentina over the summer.
Skrtel has become a vital member of the Reds side since arriving in a ?6million deal from Zenit St Petersburg in 2008.
The Slovakia international was pictured on the Liverpool website signing the contract with managing director Ian Ayre at the club's Melwood training ground. Liverpool have given no details of the length of the deal.
Skrtel, who was voted the Anfield club's player of the season in 2011-12, said: "I'm happy because I am a part of one of the biggest clubs in the world. After last season there was a lot of talk about my future but I have to say that the first priority for me was always to sign a new deal with Liverpool.
"For me it's a great thing to play for Liverpool. I am proud to play for Liverpool with these great players - probably some of the best players in the world. I hope I can create history at this club and that the fans will always remember me - that's my target for the future."
The deal will lift manager Brendan Rodgers after his side slumped to a 3-0 defeat at West Brom in their Barclays Premier League opener on Saturday.
It will also ease some uncertainty with Rodgers having also had to contend with speculation over the future of Skrtel's centre-back partner Daniel Agger.
Skrtel, who has made 175 appearances for the Merseysiders, said: "I have been here almost four and a half years and I have enjoyed that time here - myself and also my family. So there were no questions about whether to stay or to leave.
"A lot of things have changed, a new manager has come. I think we can start to make history and I want to be a part of that history. We have our target. For this season it is the top four and I hope we can do it. Then we will see."
Source: PA