In an explosive opening 20 minutes, the Reds scored four goals to have the pre-round league leaders reeling, before the two sides exchanged goals in the second half.
An unlikely brace from defender Martin Skrtel, a simple tap-in from Raheem Sterling and a fine finish from Daniel Sturridge after a pinpoint through ball from Philippe Coutinho sent fourth-placed Liverpool on their way before Sterling added a second seven minutes into the second half.
Mikel Arteta pulled one back for the Gunners when converting from the penalty spot in the 69th minute but the damage had more than been done as Arsene Wenger's side relinquished top spot while Brendan Rodgers' Liverpool remained fourth.
Manuel Pellegrini's side, who were all the rage about a week ago, were held to a 0-0 draw by Norwich City at Carrow Road making it two scoreless matches in a row following their stalemate with the Blues at the Etihad Stadium on Monday night.
Garry Monk had a dream start to his managerial career as Swansea City cruised past Cardiff City 3-0 in the Welsh derby while Kevin Nolan made it four goals in two matches to push West Ham United further clear of the drop zone thanks to a 2-0 triumph at Aston Villa.
Debutants Tom Ince and Joe Ledley were both on target as Crystal Palace continued their revival with a 3-1 win over West Bromwich Albion, Hull City got the better of ten-man Sunderland 2-0 at the Stadium of Light, Stoke City twice equalised to force a 2-2 draw at Southampton, Fulham netted an injury-time leveller to hold the struggling Manchester United to a 2-2 draw at Old Trafford and Tottenham kept their top four hopes alive with a lucky 1-0 home success over Everton.
2013/14 Barclays Premier League season scores
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