With title rivals Manchester City winning at Everton on Saturday, the pressure was on Brendan Rodgers and his side as they travelled to Selhurst Park needing all three points to maintain any realistic chance of ending their 24-year wait for a league crown.
Everything seemed to be in order as the visitors charged into a three-goal lead befitting of their domination of the game, before the Eagles mounted a spirited comeback to score three in nine minutes and seal a memorable draw.
City had strolled to victory in south London eight days ago but Palace did not roll over as easily against Liverpool, who now hold just a one-point advantage at the top of the table with City's game in hand coming at home to Aston Villa on Wednesday.
Joe Allen's first Liverpool goal was enough to give the Reds a half-time lead, with fit-again Daniel Sturridge and double player of the year Luis Suarez scoring in two early second-half minutes.
But with the backing of a ferocious home crowd, Palace clawed their way back into the game with a deflected effort from Damien Delaney and a brace from substitute Dwight Gayle which left Steve Gerrard haunched over in anguish and Suarez in tears at the full-time whistle.
It was a lively opening from Palace, roared on by a home crowd celebrating their top-flight survival, but the visitors soon took control of possession, slowly quietening those supporters looking to enjoy a final home game of the season.
Glen Johnson felt he should have been awarded an early penalty after a wild swing at the ball from Yannick Bolasie saw the Palace winger catch him on the thigh before Mamadou Sakho wasted a free header.
Johnson was the next to come close as he beat the offside trap to latch onto Allen's long ball into the Palace box, but the full-back could only guide a header over Julian Speroni's crossbar.
With Liverpool in the ascendancy, the opening goal came on 18 minutes, when Allen found himself in space to head home a corner and put the visitors ahead on his 50th league appearance for the club.
Jason Puncheon forced Simon Mignolet into his first save of the evening shortly afterwards as his low drive nicked off Sakho before Mile Jedinak tested the Belgium international with a long-range shot arrowed towards the top corner.
Palace keeper Julian Speroni tipped a bending Sturridge effort onto the post, with Suarez smashing the follow-up high and wide with a rare lack of composure before Liverpool added their second.
Gerrard, looking to put his vital slip in the defeat to Chelsea behind him, picked out Sturridge with a sumptuous pass and his England colleague controlled the ball before his deflected shot found its way into the bottom corner.
Just two minutes later, Suarez was on the end of another free-flowing attack, poking home past Speroni after being found by Raheem Sterling.
Palace pulled a goal back with a little over 10 minutes to go as Delaney let fly with a speculative long-range effort which beat Mignolet courtesy of a deflection off Johnson.
That goal seemed to unnerve the visitors, who conceded again when Yannick Bolasie burst through and calmly picked a pass for Gayle turn the ball home to bring Palace right back into the game.
A memorable comeback was completed in the 88th minute as fellow substitute Glenn Murray chested the ball into the path of Gayle, who showed great composure to slide a shot under Mignolet to level proceedings.
Liverpool pushed forward in the five minutes of additional time but could not find a winning goal and will now be relying on favours from both Villa on Wednesday night and West Ham on Sunday if they are to win a 19th league title.