The new deal will keep the former Feyenoord star at Anfield until the summer of 2013.
Kuyt said: “I am very happy. We have spent a long time (in discussions) but always with the intention to reach an agreement.
“All the conversations were conducted in a friendly atmosphere. It fits perfectly with the feeling I got at this club.
“Since the day I first walked in, I felt welcome. That feeling has never left.”
Manager Kenny Dalglish added: “He never gives up, fights with everything and he is simply a good footballer.
“He scores goals and it’s as simple as that, and often in major competitions or at crucial moments, like the recent Manchester United game.
“Dirk is happy with the extension, and I am sure we will enjoy having him.”
