The new contract will keep the 21-year-old at Bayern Munich until the summer of 2018.
The Austrian joined Bayern Munich as a trainee in 2008 and has developed into a key player for the German side.
“David has undergone amazing development,” Bayern Munich chief executive Karl-Heinz Rummenigge said in a statement.
“He is already among Europe’s best and most successful full backs.”
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Liverpool have unveiled their new home kit for next season, sticking with the hugely popular retro styling of the current shirt.
The reputation of the Premier League means it is the most popular and one of the most watched leagues in the world.