Steve McManaman delivered a moment of brilliance to light up an error-strewn Highbury clash as Arsenal were sent plunging to their first home defeat since May.
The England winger had been as disappointing as any of the attacking players on display in a game that had precious little to commend it.
But 11 minutes after the interval Arsenal stood off McManaman as Stig Bjornebye lined up to take a left-wing throw into the box.
Given two yards, he took a mile, thrashing the ball right-footed over and beyond the groping hands of David Seaman to move Roy Evans' Reds to within two points of the Gunners from only their second away League win of the season.
It was McManaman's sixth goal of the season and although not quite on a par with those sensational strikes against Celtic and Aston Villa in September, it was still one to savour.
Yet for Arsenal the hopes raised by Dennis Bergkamp's return after suspension fell horribly flat as strike partner Ian Wright's goal drought continued.
In the six games since Wright last found the net against Barnsley, Arsenal have picked up just five points out of 18, in stark contrast to Manchester United's 13.
Today he never looked like ending the lean run. He was starved of service and gave every impression of not knowing where his next goal is coming from as Arsenal ran out of ideas long before the end.
But for Liverpool, humiliated at home by Barnsley last week, this was much more like it, Evans getting the result that will make him far more content, even if they face the champions at Anfield next week trailing by nine points.
The Arsenal fans voiced their displeasure, Bergkamp's return after that three-match absence having brought a buzz of anticipation for the home fans - and the opening exchanges showed why.
Bright and inventive, the Dutchman gave a focus to the Arsenal attack and Wenger's team dominated the first 20 minutes as the lack of Paul Ince and Robbie Fowler was keenly felt by Liverpool.
Tony Adams, up from the back, showed unlikely skill by chesting down a searching Nigel Winterburn cross before volleying at David James.
Then Bergkamp's brilliance saw fellow Dutchman Marc Overmars set up Stephen Hughes to crash a rising left-footer 12 inches too high.
Still Arsenal were taking advantage of a dreadfully slow start by the visitors and when McManaman gave the ball straight to the fitful Overmars in the 11th minute, they should have pressed it home.
The winger had a three-versus-two situation, Wright to his left and Bergkamp to his right, but he delayed too long before looking for Bergkamp and when he lost his footing, James plunged on the loose ball.
But with Emmanuel Petit clearly rusty on his return from suspension and Bergkamp's influence waning, Arsenal lost their way, allowing Liverpool to gain parity.
Michael Owen's energy was the spark, one break down the left leaving Martin Keown trailing, before he just failed to pick out Karlheinz Riedle. Then Nigel Winterburn made a vital interception when the pair again linked.
Owen wasted one chance when David Platt gave the ball away, although the Liverpool striker did force a foul from Adams that earned the home skipper the game's first caution.
The game was dying and was not helped by news of United's Old Trafford goal feast, but Arsenal did come again before the break.
Bergkamp's freekick was flicked on by Keown for Adams to nod across goal with Hughes - in for the injured Ray Parlour - just unable to get there, before James was nearly embarrassed by a Jamie Carragher backpass.
There were also some undercurrents from last year's meeting and its controversial penalty, with Bergkamp catching Jason McAteer late and the Liverpool bench furious with Graham Poll for waving play on, although Platt squandered the opportunity.
Arsenal began the second period in similar fashion, Overmars and Hughes both firing wide of James' left-hand upright.
Dominic Matteo and Bjornebye were booked for fouls, but Liverpool then started to play the football that had been completely beyond them up to that point.
Seaman had to sprint off his line to foil Owen feet first after a Winterburn error, but there was nothing the England keeper could do about McManaman's goal.
Now the complexion of the game was utterly different. Owen left Adams in his wake on half-way, but Redknapp failed to make the most of the opening.
Then Oyvind Leonhardsen delivered a perfect ball onto Riedle's head, only for Seaman to deny the German.
Wenger tried to change things by sending Christopher Wreh on for Hughes when Wright was making little impact and Overmars lacked conviction.
Riedle almost compounded Adams' miserable afternoon when he danced past him to clip a shot a fraction off target and while Arsenal did put pressure on the Liverpool back line, they could not manufacture a clear shot.
Liverpool could, though, Seaman having to be at his best to deflect a Leonhardsen strike and, as time ran out, they looked increasingly likely to claim a second on the break.
It did not come, but it did not matter. Arsenal were so limited it made a mockery of their championship aspirations and Liverpool had the boost they desperately needed.
Arsenal: Seaman, Dixon, Winterburn, Adams, Platt, Wright, Bergkamp, Overmars, Keown, Petit (Grimandi 78), Hughes (Wreh 65).
Subs Not Used: Manninger, Upson, Boa Morte.
Booked: Adams, Dixon.
Liverpool: James, Kvarme, McAteer, McManaman, Leonhardsen, Redknapp, Riedle, Owen (Murphy 88), Bjornebye, Matteo, Carragher.
Subs Not Used: Babb, Harkness, Berger, Nielson.
Booked: Matteo, Bjornebye, Owen.
Goals: McManaman 55.
Ref: G Poll (Tring).
League position: 7th (25 points after 15 matches).
Copyright - Press Association