The match, played in front of 96,000 spectators at Wembley Stadium, was won by Arsenal 2–1.
Ian Rush opened the scoring for Liverpool with a side foot finish to the corner of the net, before Charlie Nicholas equalised, turning in a cross from the right in a crowded penalty area.
Nicholas was credited with scoring the winning goal in the second half from a Perry Groves cross.
His off-target shot deflected off Ronnie Whelan and was diverted past Liverpool goalkeeper Bruce Grobbelaar's outstretched hand and into the left corner of the net.
Ian Rush's goal was his first to be scored on the losing side in any competition.