Andy Carroll scored against his former club as West Ham leapfrogged Liverpool in the table thanks to a first league double over the Reds for 52 years.
Michail Antonio beat Nathaniel Clyne to Enner Valencia’s early cross to net the Premier League’s first goal of 2016.
Liverpool midfielder Emre Can was denied by the bar but Jurgen Klopp’s side were off the pace throughout.
Carroll, who cost Liverpool a club record £35m in 2011, sealed the points after meeting Mark Noble’s cross.
West Ham’s second straight win lifted them to fifth in the table, Liverpool dropping to eighth, reports the BBC.
Liverpool travelled to London knowing victory would leave them just two points off a Champions League place after back-to-back festive wins over Leicester and Sunderland.
Yet this was a stark reminder to Klopp that he has his work cut out in 2016 after a lacklustre display that had echoes of the 3-0 defeat by Watford last month.
Can did clip the Hammers bar with a curling effort from the edge of the penalty area in added time at the end of the first half. The closest they came prior to that effort was Jordan Ibe’s low shot in the fourth minute which whistled just wide.
Lucas then had a header cleared off the line by Mark Noble at 2-0 and substitute Joe Allen wasted a great chance late on. However, West Ham showed more attacking threat and more energy, and were just as impressive as they were when they defeated Brendan Rodgers’ Reds 3-0 in August.
Carroll has endured some dark days at West Ham since joining for £15m in June 2013 thanks to injuries, but this was a day to remember for the former Reds player, who remains Liverpool’s record signing.
He produced a trademark header to meet a wonderfully weighted cross, Clyne again beaten in the air as he was for Antonio’s goal. Carroll celebrated as though his goal had decided the title.
In contrast, Christian Benteke – Liverpool’s second costliest player – endured a miserable day as his first touch deserted him time and again. He was played through in the 25th minute but allowed James Tomkins to whip the ball off his toes before ballooning a 58th-minute chance over the bar.
Hammers boss Slaven Bilic was not even born the last time West Ham did the double over Liverpool. As poor as the Reds were, West Ham were impressive.