The match took place at Anfield, where Arsenal had the humbling experience of forming a guard of honour for Virgil van Dijk's 300th Premier League appearance.
The Gunners started slowly, with Liverpool taking the lead through Cody Gakpo's headed goal in the 10th minute.
Just two minutes later, Liverpool doubled their lead with Luis Diaz scoring his fourth goal in five league matches.
The Gunners struggled to keep up with Liverpool's pace in the first half, but managed to stay within two goals.
At the start of the second half, Arsenal made a quick comeback, with Gabriel Martinelli heading in a goal from Leandro Trossard's cross within three minutes.
Despite Liverpool making some changes, Arsenal continued to build momentum, and Mikel Merino scored the equalizing goal after a rebound from Alisson Becker's save.
However, Merino's celebration was short-lived as he received a second yellow card, giving Liverpool a man advantage for the remainder of the match.
In the 95th minute, Liverpool thought they had taken the lead, but the goal was disallowed, securing a valuable point for Arsenal that puts them in a strong position for UEFA Champions League qualification.