Last season's Premier League top two faced off in New York as the reds pre-season preparations continued.
The score was 2-2 at full time ensuring this 'International Champions Cup' went to penalties.
The goals began to flow in the second half - Stefan Jovetic grabbing both Man City goals, but the reds equalised twice. First thanks to a Jordan Henderson strike and then via Raheem Sterling.
Henderson's equaliser on the hour was a brilliant curled strike - his improvement in goalscoring last season was one of the positive aspects of the season.
Sterling's goal was more straightforward - slotted past Joe Hart after a set-up by Lucas.
Sturridge and Lambert were both guilty of wasted chances and concerns can continue to be raised about Liverpool's left and right back positions - it was no surprise that both Man City's goals were built from movements down the wings - Navas involved for both.
So penalties ensued - and Emre Can, Lucas Leiva and Jordan Henderson all scored to ensure the reds went top of the group ahead of the final game against AC Milan.
Liverpool: Jones (Mignolet 46), Kelly (Johnson 46), Toure, Coates (Sakho 76), Enrique (Robinson 46), Gerrard (Lucas 75), Coutinho, Allen (Can 65), Henderson, Sturridge, Lambert (Sterling 46).
Manchester City: Caballero (Hart 46), Clichy (Richards 70), Boyata, Nastasic, Kolarov, Navas, Fernando, Zuculini, Milner (Sinclair 46), Jovetic (Toure 70), Dzeko (Iheanacho 46).