This tribute marks the first occasion in the club's 133-year history that a player's number has been retired, affecting all levels - including the first team, women's team, and all academy squads.
Jota and his brother, Andre Silva, tragically lost their lives in a car accident in Spain on July 3rd.
The club made this decision after discussions with Jota's wife, Rute, and other family members.
In a statement, the club expressed: "This action acknowledges not only the invaluable contributions our player from Portugal made to the Reds' successes on the field over the past five years, but also the deep personal influence he had on his teammates, colleagues, and fans, along with the lasting bonds he created with them."
Liverpool CEO Michael Edwards remarked: "As a club, we were fully aware of our supporters' feelings, and we shared the same sentiments.
"It was crucial for us to include Diogo’s wife, Rute, and his family in this decision and to ensure they were informed first about our intentions.
"I believe this is the first instance in Liverpool Football Club's history where such an honour has been granted to an individual. Thus, we can say this is a distinctive tribute to a uniquely remarkable person.
"By retiring this squad number, we are making it eternal - ensuring it will never be forgotten.
"Diogo joined us in 2020, he brought us number 20, and he wore - with pride, distinction, and affection - the number 20.
"From Liverpool Football Club's perspective, he will always be our number 20."