Aston Villa exposed Liverpool's flaws and the flakiness of their challenge for a top-four place by inflicting the Reds' worst home defeat for more than three years.
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Christian Benteke scored twice, either side of Andreas Weimann's well-worked goal, before Steven Gerrard's late consolation as the hosts' three-match winning run was ended in surprising fashion.
It was the first time Villa had scored more than once in any half of league football this season and extended their own unbeaten run to five matches, with only a second away win in 17 away league games.
Villa inflicted the same scoreline in August 2009, and although both sides are at a lower level now, this was a result no-one would have predicted.
The visitors almost doubled their league away goals tally for the campaign, which now stands at seven, in recording only their fifth Anfield victory in 34 visits.
Yet barely 24 hours earlier Liverpool manager Brendan Rodgers had been talking about targeting second-placed Manchester City so high was the confidence in his squad.
City are now 14 points ahead and, worse still, Liverpool failed to take advantage of Everton's draw at Stoke to close the gap on fourth place with many of their rivals playing on Sunday.
For their part Villa moved three points clear of the relegation zone.
The opening half-hour was virtually one-way traffic as the home side set off at pace in search of a third successive Barclays Premier League victory for the first time since May 2011.
But their eagerness seemed to get the better of them as there was an air of over-complication and lack of finesse about their play in the final third.
Stewart Downing, who in the matchday programme revealed Rodgers had told him he could leave and he would assess his options in January, started left-back for the injured Jose Enrique but enjoyed plenty of space down the flank.
Gerrard bundled a shot at goalkeeper Brad Guzan after a poor pass behind him from Luis Suarez, returning after suspension, rebounded back off Raheem Sterling before Downing shot wide after cutting in on his right foot.
It continued with Joe Allen driving wide, Gerrard's feet getting in a tangle after being picked out by Suarez's inch-perfect cross-field ball, and Shelvey delaying his shot long enough got Nathan Baker to block after Suarez capitalised on Chris Herd's mistake.
Liverpool's inability to take their chances has hurt them in the past and it proved to be the case again in the 29th minute.
Brett Holman passed inside to Benteke, who took a touch and - with no-one closing him down - unleashed a low shot which beat Reina off the inside of his right-hand post.
What a difference the goal made as Villa suddenly started playing 30 yards further up the field.
It almost paid off when Weimann seized on Glen Johnson's weak header to lob Reina, only for the ball to drop on to the roof of the net.
The Austrian did not make the same mistake just before half-time with a brilliantly-worked goal.
Weimann released Benteke in the inside-right channel and raced into a gaping hole in the Liverpool defence to turn the striker's clever backheel under Reina.
Joe Cole's emergence for the second half at the expense of Shelvey highlighted the lack of genuine match-winners outside of Rodgers' first XI.
They should, however, have got back into the game early in the second half when Ciaran Clark clearly pulled Daniel Agger's shirt in the penalty area, but referee Neil Swarbrick maintained Liverpool's record of not winning a penalty this season by ignoring the appeals.
It proved costly as when Cole was robbed by Holman on the halfway line, Benteke was sensibly quickly given possession and he danced through the Reds backline to chip a shot past Reina.
Liverpool laid siege to Guzman's goal in the final half-hour, with further claims for a penalty when Johnson's header hit Baker's arm also going unanswered.
When they finally made a breakthrough it came too late with Gerrard heading in Johnson's cross-shot three minutes from the end.
There was just enough time left for Benteke to escape with a yellow card for pushing Johnson in the face in front of a rapidly-emptying Anfield.