Sherwood's Tottenham side go to Anfield on Super Sunday aiming to end their hosts' run of seven straight league wins.
That sequence has left Liverpool within a point of leaders Chelsea with seven games to play, although Manchester City - two points further back with two matches in hand - remain the title favourites.
Sherwood was part of the Blackburn side crowned champions at Anfield in 1995 despite losing the final game of the season, and the Spurs boss reckons Liverpool's chances of a first title since 1990 rest on their players' ability to handle the pressure of the run-in.
He said: "They're very, very close - one point off the lead and absolutely flying.
"They've got a strike partnership in Luis Suarez and Daniel Sturridge that's the best the Premier League has seen for a very long time, and they've given themselves a real chance.
"Now they have to believe they've got something that might fall through their grasp and slip away and - believe me - that's a real bad feeling to have because perhaps you don't play with the freedom you'd played with earlier in the season. I know what it's like myself.
"It all depends on how they can hold their nerve. City and Chelsea have to be favourites because of the players they have who've crossed that line and done it previously.
"But Liverpool have gone from seventh last year and must be believing they can actually win this Premier League title."
Sherwood claims he sensed signs of nervousness during Liverpool's victory over Sunderland in midweek, and with a seven-point deficit on fourth-placed Arsenal to bridge he said: "We're going there to win the game. The pressure's on Liverpool."
Liverpool v Tottenham is live on Super Sunday. Coverage begins on Sky Sports 1 at 3.30pm following live coverage of Fulham v Everton.