Fernando Torres struck a brilliant opener in the third minute at Anfield and Glen Johnson's deflected strike made it 2-0 at the end of a first half in which the hosts could easily have scored six.
Torres scored his seventh goal in four matches, and his 18th in 21 Premier League appearances, midway through the second half before Liverpool coasted in the latter stages.
For Liverpool this was an eighth successive home league win, their best run at Anfield since winning eight in a row towards the end of the 2007/08 season.
More importantly it kept Rafael Benitez's side within four points of Tottenham, whose win over Portsmouth on Saturday cranked up the pressure in the race for fourth.
Liverpool responded accordingly and within 55 seconds defender Daniel Agger smashed a left-footed volley straight at goalkeeper Craig Gordon after Dirk Kuyt had flicked on Steven Gerrard's free-kick.
That the Denmark centre-back had a further two good goalscoring opportunities before half-time gave an indication of how dominant Liverpool were.
However, when it comes to goalscoring there are few to equal Torres and his third-minute strike was a piece of individual brilliance.
Goalkeeper Jose Reina picked him out wide on the left touchline and he dribbled inside Michael Turner to curl a shot over Gordon and perfectly into the far top corner.
In what was the best 45 minutes of football in Liverpool's season, Javier Mascherano had two long-range shots, one headed clear by Kieran Richardson and the other skewed wide, while Torres was just off target with a near-post effort following intricate passing between Maxi Rodriguez and Gerrard.
Ball retention, the pace of the passes, and the general attacking intent made for an exhilarating half.
More chances came and went as Gerrard's run and shot in the penalty area ended in a deflection behind and Rodriguez's near-post header from his captain's corner was superbly tipped over by Gordon.
Had Liverpool been 5-0 up after 30 minutes it would not have flattered them, but they had to settle for just the two goals at the interval.
The second came from Johnson in the 32nd minute when Gerrard's inswinging corner was only cleared to the edge of the penalty area and the defender touched the ball inside on to his left foot and unleashed a shot which took a slight deflection off Turner to beat Gordon.
Torres hit a post and then bundled the rebound wide before the break as Sunderland almost imploded under the pressure.
Liverpool's biggest problem in the second half was the expectation on them to reproduce the football they had displayed before the break.
While it did not reach those heights, they were hardly troubled.
Ryan Babel fired well over after Gerrard's driving run from halfway while Torres had an eight-yard shot blocked by Paulo da Silva, on at half-time for Lee Cattermole.
But the Spain international was not to be denied much longer and on the hour he scored his second goal, which was as simple as his first was brilliant.
Babel's far-post cross to Rodriguez dropped to Johnson who slipped a pass inside where Torres spun on the penalty spot to turn the ball past Gordon.
Alberto Aquilani replaced Kuyt with 20 minutes to go, with Torres making way for David Ngog to another standing ovation 12 minutes from time.
Richardson probably went closest to scoring for Sunderland when he flashed a left-footed shot just wide of Reina's right-hand post.
Gerrard's removal for winger Nabil El Zhar late on signalled that Benitez was more interested in saving his players for Thursday's Europa League quarter-final against Benfica in Lisbon.
What the Liverpool players must now prove in their remaining six league matches is that this performance was not a one-off.
If they can, then Benitez's guarantee of fourth place may yet hold good.