Chelsea produced a performance of great quality and strength to leave Liverpool's dreams in tatters after this quarter-final first leg.
Next Tuesday's second leg at Stamford Bridge may not be a mere formality just yet, but Liverpool will need an exceptional performance to stay in the competition.
It all started so well for Liverpool when Fernando Torres scored in the sixth minute. But Chelsea gradually took over, and two headed goals from Branislav Ivanovic - both poorly-defended set-pieces - and a close-range Didier Drogba strike stunned the Reds.
Steven Gerrard appeared to be struggling for full fitness - and with their captain's powers compromised, Liverpool saw a 14-month and 32-match unbeaten home record destroyed.
The side that has of late battered Real Madrid and Manchester United into submission was nowhere to be seen as Chelsea reigned supreme.
Liverpool had Albert Riera and Fabio Aurelio back after being rested on Saturday at Fulham, while Lucas was in for the suspended Javier Mascherano.
Chelsea had Drogba back up front, and Ivanovic continued as the injured Jose Bosingwa's replacement.
For the 23rd meeting between these bitter rivals in five years - nine in the Champions League - the atmosphere was electric, the noise deafening and the stakes so high.
Liverpool could not have got off to a better start.
Dirk Kuyt had already seen a shot deflected inches wide, before he produced a clever backheel on the edge of the box to set up Alvaro Arbeloa for a laid-back cross which was clinically driven past Petr Cech by Torres from 12 yards.
Yet that just served to galvanise Chelsea into sustained possession and pressure and a performance of growing assertiveness.
The alarm bells should have been ringing within two minutes of their goal for Liverpool when Salomon Kalou pounced on an Aurelio error to send Drogba clear - only for Jose Reina to make a fine, blocking save.
Michael Ballack and Michael Essien slowly but surely took over in midfield, and Liverpool were forced back. Florent Malouda flashed one effort wide of the far post, before Drogba blasted over from close range.
Liverpool were rattled, Torres isolated and Gerrard denied time and space.
Drogba, all menace and muscle, gave Martin Skrtel a hard time - while Kalou was equally dangerous on the right against Aurelio.
Torres curled one effort wide, and Arbeloa missed with a left-footer. But they were rare breaks from Liverpool, Chelsea already moving relentlessly towards an equaliser.
It came after 38 minutes when Malouda's right-wing corner was met with a firm header by Ivanovic, having evaded three defenders in the box as he darted and twisted into space to beat Reina from six yards.
Chelsea went for the throat straight after the break, and only Jamie Carragher's plunging clearance off the line from Drogba's angled effort stopped them going ahead after 51 minutes.
The game had taken a nasty turn by now.
Torres took a painful crack on the ankle from Alex seconds after firing over, and Essien looked to be caught by Skrtel's shoulder in one shuddering aerial collision - before John Terry clattered into Reina in mid air and was booked.
That yellow card will put Terry out of next week's second leg, but Chelsea annoyance was soon replaced by more elation.
A 62nd-minute corner from Frank Lampard was again met by Ivanovic, again unmarked, as he powered another header past Reina to put the Blues ahead.
It soon got even better for Chelsea, and horribly worse for Liverpool.
Five minutes after their second, Drogba arrived in the six-yard box to finish off a low cross from Malouda on the left.
Liverpool's fans fell silent, and the replacement of Riera with Yossi Benayoun before the re-start seemed of little consequence.
Liverpool sent on Ryan Babel for Lucas and Andrea Dossena for an out-of-touch Aurelio, who had just been booked. Drogba went off to a great ovation from the travelling support, allowing Nicolas Anelka into the fray.
The game, though, was already well won by the Blues and up for the Reds.