The away side came out all guns blazing and would have took the lead inside the opening exchanges if it was not for Pepe Reina's gloves parrying away an early Charlie Adam free kick.
Shortly after, Liverpool were dealt a major blow when Fernando Torres was substituted for David Ngog after only nine minutes.
Ngog proved to be ineffective in the first half and was reduced to long range shots that were easily dealt with by Matt Gilks.
Ian Holloway's 'all or nothing, all out attack' footballing philosophy had Liverpool rattled and the back four could not cope with DJ Campbell who went close on a couple of occasions.
The breakthrough came for the Seasiders when Luke Varney cut inside from the left of the penalty area, only to be hacked down by Liverpool and England right back Glen Johnson, leaving the referee no option but to point to the penalty spot.
Captain courageous Charlie Adam stepped up and slotted the spot kick home into Reina's bottom left corner to give Blackpool a 1-0 lead at Anfield after 29 minutes.
The Tangerine army were going bonkers and they had even more to cheer about when Varney doubled the away side's lead in first half stoppage time.
Gary Taylor-Fletcher expertly fed Varney who timed his diagonal run cutting in from the left to perfection.
Kyrgiakos played Varney onside who took one touch before smashing the ball beyond Pepe Reina to send Blackpool into a 2 - 0 lead at half time against Liverpool at Anfield.
Liverpool came out fired up for the second half and only had to wait ten minutes for their first and only goal when Steven Gerrard's quick free kick into the box was met by a thunderous Kiryagos header.
The home team kept applying pressure and Joe Cole soon found himself one on one with Gilks, only for his shot to go narrowly past the post.
Blackpool were still a threat on the break and DJ Campbell would have made it three if it were not for a timely intervention by Glen Johnson after Varney played the ball accross goal to be tapped into an open net.
The Seasiders were resolute right till the final whistle and in stoppage time Matt Gilks pulled off a spectaular reaction save to keep out another Kyragos header.
A famous win leaves Ollie's men sitting nicely in ninth place in the table with ten points. Next up is the small matter of second placed Manchester City, whose wealth of riches will be tested to the absolute limit by an all out attacking assault on Joe Hart's goal.
So far so good, attack! Attack! Attack! Attack! Attack!
FT: Liverpool 1 - 2 Blackpool
Kyrgiakos 53 Adam 29 (pen)
Varney 45+1
Starting line-ups:
Liverpool: Reina, Johnson, Skrtel, Kyrgiakos, Carragher, Poulsen (>60), Miereles, Gerrard, Cole (>88), Kuyt, Torres (>10). Subs: Jones, Jovanovic (<60), Maxi Rodriguez (<88), Lucas, Ngog (<10), Spearing, Kelly
Blackpool: Gilks, Eardley (>46), Evatt, Cathcart (>20), Crainey, Adam, Vaughan, Grandin (>63), Varney, Taylor-Fletcher, Campbell. Subs: Halstead, Southern (<63), Keinan (<20), Harewood, Ormerod, Phillips (<46), Carney, Sylvestre
Date: 03/10/10
Venue: Anfield
Attendance: 43,156
Referee: Michael Jones