Gabriel Magalhaes put the Gunners in front after just four minutes, but Liverpool talisman Mohamed Salah cancelled that out before the half-hour mark.
That was how things stayed at Anfield as the spoils were ultimately shared between the two sides, meaning Arsenal remain a point ahead of second-placed Liverpool at the summit of the Premier League and will be top of the table at Christmas.
Things could have turned out differently, though, as Liverpool were controversially denied a penalty in the first half.
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The ball struck the hand of skipper Martin Odegaard inside the 18-yard box while he slipped but referee Chris Kavanagh did not point to the spot.
The incident went to VAR but the original on-field decision stood, much to the frustration of Liverpool fans, and Gunners defender William Saliba admitted it ought to have been a penalty.
Despite the lack of what should have been a clear spot kick, Kop boss Jurgen Klopp was very complimentary of Arsenal after the encounter.
Speaking to BBC Sport, Klopp said: "Oh my god, how strong are they? The good news is we are good as well.
Liverpool and Arsenal bosses Jurgen Klopp and Mikel Arteta. (Credit: Getty)
Liverpool and Arsenal bosses Jurgen Klopp and Mikel Arteta. (Credit: Getty)
"(Manchester) City are a very good team as well, but Arsenal will be up there, we hope to be up there. We will really push them.
"Arsenal are really exceptional, but for those 20 minutes we had them we shattered them slightly. We felt that they were shaky and we should have used that.
"Neither side gave up. Until the last second it was top intensity, everybody felt it, super intense. Tough game, good game, in moments spectacular.
"Absolutely we take confidence from the result. You have to take confidence from these results and performances against a top side. We did not play badly against Manchester City, for example, but it was not as good as today. You have to take these things forward."
And immediately after the full-time whistle, as Klopp and Mikel Arteta embraced, the Liverpool boss simply said 'wow, wow, wow' to his Gunners counterpart as he reflected on the encounter.
Champions City have a game in hand over both Liverpool and Arsenal, due to being in FIFA Club World Cup action, and are currently six points off the summit of the Premier League.
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