Jota joined Liverpool from Wolves in 2020 and scored 65 goals in 182 appearances for the club.
He also helped them win the FA Cup and League Cup in 2022 – also winning the latter in 2024 – and the Premier League title last season.
It was Liverpool’s 20th top-flight crown and the Reds posted a video on social media, external with the message ‘forever our number 20’ at 20:20 BST on Friday.
“As a club, we were all acutely aware of the sentiment of our supporters – and we felt exactly the same way,” said Fenway Sports Group chief executive of football Michael Edwards.
“It was vitally important to us to involve Diogo’s wife, Rute, and his family in the decision and to ensure they were the first to know of our intention.
“I believe this is the first time in Liverpool’s history that such an honour has been bestowed upon an individual. Therefore, we can say this is a unique tribute to a uniquely wonderful person.
“By retiring this squad number, we are making it eternal – and therefore never to be forgotten.”
Jota and his brother died after their car, a Lamborghini, left the road because of a tyre blowout while overtaking another vehicle at about 00:30 local time on Thursday, 3 July.
Jota was on his way back to Liverpool for pre-season and, as doctors had advised him against flying because he had undergone minor surgery, he was making the trip by car and ferry.
The funeral of the brothers took place in their hometown of Gondomar last Saturday when a large Liverpool delegation were in attendance.