The 32-year-old’s deal expired at the end of June, but with the Premier League set to return midway through the month following the pandemic, he has extended his stay as Liverpool require just a handful more points to be crowned champions for the first time.
Lallana, who will still likely leave the club at the conclusion of the season, is delighted to have the opportunity to “finish” the job of the championship campaign.
He said: "I am really pleased to have the chance to finish this season - it means a lot to me and my family.
"I feel in my time at Liverpool I've always looked to do the right thing for the team, the manager and the club in every decision I've made.
“I think this one fits into that category as well, so I'm buzzing to be seeing out this campaign and hopefully get to celebrate something memorable with an amazing group of people."
Jurgen Klopp also revealed his delight at keeping the player.
“It's not possible to find words in the English language to properly explain the importance of Adam Lallana during my time at the club,” he said.
“Even the way he has handled this tells you all you need to know about a top pro and even better person.
"I know how highly-sought after Adam is in this moment by other clubs who want him for next season, so for him this is a commitment to us and we are very appreciative to him for it.
"Even the way he has handled this extension tells you all you need to know about the person and his character. A top-class professional and an even better person.
"He wants to be here to finish the job and do it properly, but it says everything about him that his biggest concern was blocking the progress and opportunity of a player who is under contract for next season also."