The Belgium international is in her second stint with the Reds, having returned in 2021 following two seasons with Bristol City, after initially joining in 2018.
Daniels helped Matt Beard's side win the FA Women's Championship in 2021-22, before making 17 appearances in the Barclays Women's Super League last season.
"It feels really good, I always enjoy it here. Also with Matt, I know what he wants and I can really fit with how he wants to play," she told Liverpoolfc.com.
"Liverpool is a second home now, I'm really settled and I'm happy here. Also where the club is going, it's nice to be part of a future project, so I'm really looking forward to it.
"You can feel the ambition is really big from the club and us players as well, so we definitely want to do even better than last season and finish as high as we can.
"I'm quite a versatile player, so I just want to help the team in any position possible."
That versatility has seen Daniels start in many different positions for Liverpool during the past two campaigns, a fact welcomed and highlighted by her manager.
Beard said: "Yana's versatility is key for us. What I love about Yana is she just gets her head down, works hard and has an impact in games.
"She can play numerous positions and she's different to the other forwards we have. She can play wide, she can play down the middle, she can play wing-back and full-back. To have a player of that versatility is great for us.
"She's great with the girls, she's great in the dressing room and we're delighted that she's extending."