Just three days after their FA Cup final defeat to the Blues, Kenny Dalglish’s side responded with a stunning early showing as a Michael Essien own-goal was followed by clinical finishes from Jordan Henderson and Daniel Agger.
Chelsea captain John Terry endured a nightmare evening with a spate of mistakes, while fellow defender Branislav Ivanovic could have been sent off for an elbow on Andy Carroll, with Stewart Downing missing the resulting penalty.
Ramires grabbed a goal back for the visitors just after half-time, but a horrendous attempted clearance from goalkeeper Ross Turnbull left Jonjo Shelvey to net a fourth and cap a fine win for the Reds as Chelsea saw their hopes of grabbing fourth spot extinguished.
Former Kop idol Fernando Torres returned to Anfield for the first time since his £50 million departure in January last year as one of eight changes for Chelsea with this month's Champions League final against Bayern Munich Roberto Di Matteo’s primary focus.
Liverpool, meanwhile, made four changes from their FA final side, with captain Steven Gerrard absent from the squad, but Wembley goalscorer Carroll returning to the line-up and brimming with confidence.
It started to go wrong for Terry as early as the eighth minute as Luis Suarez hurtled forward and beat him with alarming ease, only to lack conviction and drag a tame shot wide of the far post in hasty fashion.
It was not one of Ivanovic’s best games in a Chelsea shirt, but it could have been significantly better had he not been denied by the woodwork in the 17th minute: the defender leapt high to head powerfully against the near post from Florent Malouda’s corner.
Two minutes later, Chelsea’s frustration was compounded as Suarez scampered down the right and cut back from the byline, beating Ryan Bertrand and Terry with consummate ease, before his low cross was inadvertently turned into the net by Essien from a yard out.
Henderson made it two in the 25th minute as Terry clumsily slipped, allowing a seemingly innocuous ball to run through to midfielder, who was afforded a simple run at goal, and he produced a composed finish to beat Turnbull.
Just four minutes later, it got even worse for the visitors as a deep corner found Carroll, who had evaded Terry yet again, at the back post where he was able to head into the path of Agger who in turn nodded past Turnbull.
It was a truly dismal performance from the out-of-sorts Chelsea skipper.
Downing was denied by the crossbar as he unleashed a dipping volley from 25 yards which beat Turnbull comprehensively, before he saw his penalty kick rebound off the post after Ivanovic had crudely elbowed Carroll inside the box as the Liverpool forward attempted to meet a loose ball. It was the fifth spot kick to have gone begging out of six for the Reds in the league this season.
Chelsea knew that a significant improvement was required after the restart, and a goal arrived just five minutes into the second half.
Malouda whipped over a devilish free kick from the right, and Ramires got a faint touch on the ball with Pepe Reina unable to prevent it from squirming beyond him and into the net in what was a soft goal to concede.
But Liverpool swiftly restored their three-goal cushion as a horrendous scuffed clearance landed straight at the feet of Shelvey, who volleyed emphatically into an empty net for his first top-flight goal.
Substitute Romelu Lukaku should have reduced the deficit once more late on as he stole in to head on target from close range after meeting a fine cross from Malouda, but Reina made a stunning reflex save to his right to deny the forward.
With little riding on the game and the result decided, the second half petered out rather tamely, with the Liverpool fans left to celebrate a victory which lifts them above Fulham into eighth on goal difference, while Chelsea fail to close the gap on Tottenham and Newcastle and have to settle for a sixth-placed finish.