The defender was strongly linked with a move to Premier League champions Manchester City over the summer.
"I'm happy because I am a part of one of the biggest clubs in the world," Skrtel told Liverpool's official website.
"After last season there was a lot of talk about my future but I have to say that the first priority for me was always to sign a new deal with Liverpool.
"For me it's a great thing to play for Liverpool. I am proud to play for Liverpool with these great players - probably some of the best players in the world.
"I hope I can create history at this club and that the fans will always remember me - that's my target for the future."
"I have been here almost four-and-a-half years and I have enjoyed that time here - myself and also my family," he continued. "So there were no questions about whether to stay or to leave.
"A lot of things have changed, a new manager has come. I think we can start to make history and I want to be a part of that history.
"We have our target. For this season it is the top four and I hope we can do it. Then we will see.
"I think Brendan Rodgers showed his quality with Swansea and now he's carrying on doing that at Liverpool. He's showed he's a great manager and I hope we can play better football than we did in the last seasons and I hope we can get our target."