Brendan Rodgers' side went top of the Premier League on Sunday after thrashing Tottenham 4-0 at Anfield to capitalise on dropped points for their main rivals as Chelsea lost at Crystal Palace and Manchester City drew at Arsenal.
City, who trail Liverpool by four points but have two games in hand, remain the bookmakers' favourites to win the Premier League, but Carragher is convinced that his old club will beat them when they visit Anfield on Sunday April 13.
And he says the players and supporters now believe their 24-year wait for a league title is about to end.
"I think Liverpool will win it now," Carragher told Monday Night Football.
"The feeling before the weekend was 'we've got a chance', but those results and the intensity Liverpool played with on and off the pitch has changed that.
"I'm talking about the crowd, I'm talking about the Kop. You heard the roar at the end of the game and you know something's happening.
"They are chanting for Brendan Rodgers throughout the game and I've never heard that before as much. They are normally singing Kenny Dalglish's name or for Rafa Benitez a little bit, but it was all for the manager Brendan Rodgers.
"After this game there is a major belief that Liverpool will go on and win the league. There's a banner in the crowd now: 'make us dream' and I think they're making the supporters believe now.
"With the way they are playing - and the pace and energy they've got - it will be very difficult for Man City to go there and take three points.
"I can only see Liverpool winning that game."
Liverpool are the highest scorers in the Premier League so far this season with 88 goals and have scored 22 goals in their last six games.
Carragher says it's unlikely that the team will continue to hit those heights for the rest of the campaign - and feels there will be tough tests in the remaining six fixtures before the trophy is in the hands of skipper Steven Gerrard.
"You can't expect Liverpool to keep winning games by three or four between now and the end of the season," he added.
"There is going to come a moment when they are under the cosh; they might go one down or go down to 10 men.
"Something will happen that Liverpool have to come through - and then you can say they deserve to win the title for that reason.
"It will be difficult for them to win every game 3-0 or 4-0 now. I don't think that happens towards the end of the season.
"There will be a moment between now and the end, in the six games where they prove themselves as champions - and I believe they will."
Fellow Monday Night Football expert Gary Neville knows exactly what it takes to win Premier League titles, having picked up eight of them during his career.
And while he still thinks Manchester City are slight favourites to win the league, he has noticed a trophy-winning spirit emerge among the Liverpool players.
Neville said: "'Something's happening' is something you used to feel when you were going for titles.
"You used to sense it and there was a moment where you thought it. There's almost a belief and a spirit that hits you and you think 'we're unstoppable here'.
"I have to say, seeing the coach arrive at Anfield on Wednesday night, they thought something was happening. Then against Tottenham you saw the atmosphere in the ground.
"Then you saw the players. Something happened in the warm-up before the game that I wasn't seeing 12 months ago. You saw them all hugging each other, high fives and patting each other on the chest.
"After the fourth goal you saw Suarez and he couldn't wait to give Henderson the goal. I'm not sure he'd have given him the goal as quickly two years ago.
"There is a sense of calmness and you can see it among them, but I have to say City still have the strongest squad and the expectation is with them."
And when asked if he was looking forward to working on the April 13 showdown for Sky Sports, the former Manchester United full-back replied: "Liverpool v Man City for the title? It's like having a choice of two blokes to nick your wife..."