Despite going 1-0 down early in the game, the Reds swiftly responded in brilliant fashion as Roberto Firmino scored twice in less than two minutes to turn the game on its head.
Jurgen Klopp's side then added a third in the 32nd minute as Sadio Mane converted from a first-time volleyed cross from Mohamed Salah.
Salah turned provider to goal-scorer just before the break after being brought down in the area. The Egyptian smashed the ball down the middle to put the Reds 4-1 up at the break.
Firmino added the gloss to the victory in the 65th minute, with the Reds being awarded another penalty for a foul on Dejan Lovren.
The Brazilian sent Bernd Leno the wrong way as he calmly dispatched the penalty to complete his first Liverpool hat-trick and seal a 5-1 victory against the Gunners.
Liverpool lead the Premier League by nine points heading in to the New Year, with a pivotal fixture against champions Man City on 3rd January.
Slide through our gallery below for all the best photos from a successful afternoon at Anfield.