The 26-year-old’s new deal will see him remain at Anfield until 2023.
The Senegal international has scored 40 goals in 89 games for Liverpool since moving from Southampton for £34m in the summer of 2016.
Mane says the move was “the best decision” of his career.
“I am very happy, very happy to extend my time at Liverpool,” Mane said.
“It is a great day for me and now I am looking forward to everything – to helping the team, to helping the club achieve our dreams and, especially, to win trophies.
“I’ve always said, when I knew I had a chance to come here I didn’t have to think twice. The right club in the right moment and with the right coach as well. I came here and was very happy.”