Both sides knew defeat could prove fatal to their hopes of closing back up on the top four, but neither looked ready to settle for anything other than all three points in an open and entertaining match.
Liverpool took an early lead through Luis Suarez after terrible defending by Arsenal, and then looked to be in complete control when Jordan Henderson walked in a second on the hour.
However, as so often in a frustrating season, the Gunners suddenly burst into life as in-form Olivier Giroud reduced the deficit with a close-range header and Theo Walcott then rattled in an equaliser.
There were more chances at each end, but defeat for either side would have been an injustice.
Liverpool manager Brendan Rodgers had recalled his regulars tonight, making seven changes from the side humiliated at Oldham in the FA Cup on Sunday.
It was a bright start by the Reds, their travelling support displaying a banner protesting against the infamous £62 tickets for away fans.
A slip by Bacary Sagna let Glen Johnson away down the left.
His cross into the Arsenal penalty area was miskicked by Thomas Vermaelen, just back from an ankle injury, and Wojciech Szczesny produced a good reaction save from Daniel Sturridge at the far post.
Midfielder Aaron Ramsey, though, failed to clear with a tame flick and the ball broke for Suarez, whose curling shot then deflected off Per Mertesacker to wrongfoot the goalkeeper.
Arsenal almost produced an immediate response as Walcott got ahead of Jamie Carragher, but his snapshot was straight at Jose Reina.
The match remained open, with Sturridge dragging an angled shot across the face of goal.
Arsenal also continued to press, and Reina was again called into action as he turned a curling effort from Walcott around the post.
Liverpool captain Steven Gerrard then produced some desperate defending as he hooked Lukas Podolski's cross through the six-yard box behind.
The visitors, though, almost made it 2-0 on 27 minutes when Szczesny got nowhere near a corner from the left and Daniel Agger's header was hacked off the line by Podolski.
Arsenal were forced into a change before half-time when Kieran Gibbs hobbled off and Brazil defender Andre Santos came on.
Szczesny was almost caught out when rushing from his goal to close down Henderson on the left corner of the penalty area, but the Liverpool midfielder chipped the ball onto the roof of the net - much to the relief of the backpedalling Poland goalkeeper.
Arsenal came close to a leveller early in the second half when Podolski floated a pass from the left out to the far post, where Walcott arrived to head it just over.
It proved a costly miss as Liverpool extended their lead on the hour.
Henderson battled past Santos and into the right side of the penalty area, before then holding off two more defenders. As the ball bounced back off Ramsey's boot, he stabbed it past Szczesny.
Arsenal needed an immediate response, and got it on 64 minutes when Giroud planted a header into the far corner from Jack Wilshere's right-wing free-kick.
Before Liverpool could settle, the Gunners were level.
Santi Cazorla worked the ball out on the right side of the penalty area to Giroud. His lay-off teed up Walcott just outside the six-yard box and the England forward lashed an angled drive across Reina into the far corner.
Walcott curled a 20-yard effort just wide after running along the edge of the Liverpool box.
Gerrard was somewhat fortunate to only have been shown a yellow card by referee Kevin Friend after jumping in with his foot raised on Mertesacker.
The 6ft 7in German was, though, soon up again as he headed a free-kick from Wilshere just over at the near post.
Reina saved at full stretch from Giroud as Arsenal looked for a late winner, with the Frenchman then scuffing an effort from close range.
Suarez saw a late strike turned away by Szczesny in stoppage time as a thrilling encounter finally ended all square.