According to multiple reports, the deal runs until 2023 and contains no release clause.
Despite only joining from Roma just over a year ago, Liverpool have rewarded Salah following a sensational debut season on Merseyside that saw him finish with 44 goals in 52 appearances.
The Egypt international secured the Premier League Golden Boot, finding the net 32 times to finish ahead of Tottenham’s Harry Kane with a new competition record for goals in a 38-game season.
Salah, who was named PFA Players’ Player of the Year for 2017-18, was also a key part of Jurgen Klopp’s squad in Europe, helping them reach the Champions League final.
However, the 26-year-old’s involvement in the showpiece event was cut short by a shoulder injury suffered in a first-half challenge with Real Madrid’s Sergio Ramos, as Liverpool lost 3-1 in Kiev.
Spanish giants Madrid were linked with a move for the forward, but he has shown his commitment to his current employers by penning a new deal.
“Mo reflects where we are as a team, I think. Last season was special with many special moments – but we want more,” Klopp told the club’s website.
“We want to be more successful and achieve more together – as the supporters sang so loudly, ‘We’re never gonna stop.’ This has to be the attitude individually and collectively.”
Salah was an unused substitute in Egypt’s World Cup opener against Uruguay due to the shoulder damage sustained in the Champions League final.
Although he scored against both Russia and Saudi Arabia, his goals failed to help his country pick up a point and they were eliminated from Group A.
Salah will enjoy a well-earned break before Liverpool begin their 2018-19 Premier League campaign with a home fixture against West Ham on August 11.