The Reds' youngsters put in a battling performance in the cup clash, but they were defeated 3-2.
It took a 90th minute goal from Stefan Payne to give the League Two side a win.
Liverpool thought they had grabbed a draw late in the game when Luis Longstaff got a goal eight minutes before the end of the game.
However, Tranmere were not to be denied, and they emerged with all the points.
The Reds now have the final fixture of the Northern Group D against Port Vale on the 10th of November.
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