In this paper we present a theoretical study of the free and localized states of an excess electron in liquid helium. Electron-helium interactions are treated by the pseudopotential method, while multiple scattering effects on the properties of a quasifree electron in the dense fluid are treated using the Wigner-Seitz model. It is demonstrated that the plane-wave state is not the lowest energy state for an excess electron in liquid helium and that fluid deformation leads to a localized state of lower energy. The large, repulsive helium-atom pseudopotential coupled with the small helium polarization potential lead to electron localization which may be attributed entirely to short-range repulsions. The following experimental observations are adequately interpreted by these results: (a) The energy barrier of liquid helium for electrons, (b) the density-dependent transition from a delocalized state to a localized state of the excess electron, (c) the mobility of an excess electron in normal 'He and in 3He. Pressure and temperature effects on the electron bubble are also discussed. It is concluded that a pressure-induced transition from the localized to the delocalized state of the excess electron will not occur in the fluid domain even at high pressures. Finally, we present some speculations concerning the optical properties of the excess-electron center.