Liverpool haven't released the formal details of the contract, but it is understood Lallana has signed a three-year extension worth £110,000 a week with the option of an additional 12 months.
The talented midfielder struggled to hit the ground running during Brendan Rodgers' reign following his move from Southampton in 2014.
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Jurgen Klopp is pleased Adam Lallana has committed his future to Liverpool
Adam is a natural leader and is so, so important within our team and also in the dressing room
Jurgen Klopp
But under Jurgen Klopp, Lallana has found his feet, becoming a key part of the German's plans.
And Klopp is clearly delighted by the news of Lallana committing his future to the club.
"Adam is a natural leader and is so, so important within our team and also in the dressing room," Klopp told the club's website.
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Adam Lallana has put pen to paper on a new long-term deal with Liverpool
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Jurgen Klopp believes Adam Lallana is still coming into the peak of his career
"Maybe on the outside his leadership is not seen as much as we see it each and every day at Melwood in everything he does.
"What I think is most exciting about this news is that this player is only just arriving at his peak. He has his very best years ahead of him and they will be at LFC.
"He is in fantastic shape and his passion for football is as high as I have seen in a player – you not only see that out on the pitch in matches, but also in training here at Melwood."