Birmingham-born playmaker Dhanda, 17, joined the Reds' academy in July 2013 from West Brom and has signed a two-and-a-half-year deal with Liverpool football club.
He is the second British Asian with a professional deal in the top league, with Swansea's Neil Taylor being the other.
Dhanda has also played for England at under-16 and under-17 level.
The attacking midfielder won the up-and-coming player category at the Asian Football Awards in 2013.
"We don't take a player because he is Asian and we don't not take a player because he is Asian," Liverpool managing director Ian Ayre told BBC Sport at the awards ceremony at Wembley in 2013.
"Yan has a fantastic opportunity at Liverpool. He is a very talented young man and we hope he will achieve the best he can do.