While Liverpool's defending was catastrophic at times, Arsenal fizzed with intent and three goals in eight first-half minutes from Hector Bellerin, Mesut Ozil and Alexis Sanchez and a late curler from Olivier Giroud secured a 10th Premier League win in 11 matches.
That moved them above Manchester City into second place on 63 points, four behind leaders Chelsea, who will be looking over their shoulders at their in-form London rivals even though Jose Mourinho's side have two games in hand.
Fifth-placed Liverpool, who netted a penalty through Jordan Henderson before Giroud's effort, now look out of the running in the battle for Champions League qualification after a second consecutive defeat.
A miserable afternoon for the visitors was capped off by a late red card for Emre Can and the result meant the gap to fourth place could be extended to eight points if Manchester United beat Aston Villa later on Saturday.
While much of the pre-match debate had focussed on Liverpool forward Raheem Sterling's on-going contract impasse, within minutes of kickoff it was clear that more pressing issues lay with the visitors' defence.
Liverpool's back-three spent the opening minutes regularly gifting the ball to the hosts in dangerous areas and their only chance of the half was inexplicably wasted by Lazar Markovic, who tried and failed to pass to Sterling when through on goal.
The breakthrough came after 37 minutes when Bellerin was allowed time to cut inside the Liverpool box before curling a superb finish past Simon Mignolet.
Given their defending on the day it seemed remarkable that it was the first goal Liverpool had conceded on the road in more than nine hours after keeping six successive clean sheets.
Arsenal doubled the lead two minutes later when Ozil stepped up to curl a free kick around the wall and into the net and Sanchez smashed home from outside the box to make it 3-0.
The hosts would have increased their lead but for a stunning save from Mignolet to deny Giroud's header at the start of the second half before Liverpool were given a faint lifeline when Sterling was felled in the box.
Henderson squeezed his penalty past David Ospina with 14 minutes remaining.
Any hope of a comeback was extinguished, however, when Can received a second yellow card for a foul on substitute Danny Welbeck and Giroud added a coat of gloss when he curled in from 20 metres in stoppage time.
(Editing by Ed Osmond)
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