Everton inflicted utter humiliation on their closest neighbours in the 204th Merseyside derby, with Andrew Johnson grabbing two goals in his first appearance in the fixture.
David Moyes' men were ahead early on through Tim Cahill and Johnson's first, and by the time he grabbed the second, in injury time, Liverpool were in near disarray.
Their 17-game unbeaten run since March was wrecked, they were down to 10 men with John Arne Riise carried off with an ankle injury, and Everton were celebrating their biggest victory over their rivals for 42 years.
That was when they won 4-0 at Anfield, and this was the first time they had scored three times against Liverpool for 40 years - and you have to go back to 1909 for the last time Everton beat Liverpool by three goals at Goodison Park.
Liverpool hardly knew what hit them. Everton were all power, determination and quality while Liverpool - despite Steven Gerrard hitting the woodwork twice - were rarely in the contest.
In-form Peter Crouch started the match despite suggestions he could be rested, and partnered Robbie Fowler, with Craig Bellamy not even in the squad as boss Rafael Benitez rested him with a Champions League game in Eindhoven and next weekend's trip to Chelsea in mind.
Jamie Carragher returned in defence in place of Daniel Agger, something of a gamble after the ankle injury that has ruled the England centre-back out since the first day of the season.
Everton had full-back Tony Hibbert in for his first game of the season after a lengthy illness.
The game had calmed from a manic start when Cahill sent Goodison Park wild with a 24th-minute goal. Mikel Arteta crossed from the right, Lee Carsley flicked on and two defenders both went for the ball, which evaded everyone and dropped for a virtually unmarked Cahill to beat Jose Reina from six yards.
Liverpool complained long and hard about a perceived foul by Leon Osman on Steve Finnan in the build-up, but referee Graham Poll was unmoved.
The visitors almost equalised on 30 minutes but Tim Howard made a fine save to palm away a Luis Garcia drive, Gerrard arriving to turn the rebound into a post and behind.
But it got worse for Liverpool on 36 minutes as they failed to deal with a succession of challenges on the left that allowed Carsley to get in a pass which saw Johnson skip behind Sami Hyypia and then get past Carragher before drilling the second past Reina.
There had to be change, and Dirk Kuyt replaced Crouch on 53 minutes and soon after raced away on the left to lay the ball into Xabi Alonso's path, only for the Spaniard to fire wildly over.
Everton were holding firm and still managed to break for Osman to almost find Johnson with a low cross, the ball bouncing agonisingly across goal.
Gerrard then hit the post again and when Kuyt followed up with an angled shot, the ball striking Hibbert on the arm as he cleared. Mohamed Sissoko was booked for dissent amid loud appeals for a penalty.
Jermaine Pennant took over from Sissoko on 82 minutes as Liverpool continued to press. But Riise received a caution for a foul on Arteta, before being carried off with his left ankle heavily strapped. It left Liverpool to finish the game with 10 men.
There was still time for Reina to fumble Carsley's long-range effort and allow the quick-thinking Johnson to head the dropping ball into the roof of the net.
Paul Walker, PA
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