Birmingham were defeated in the League Cup final before two late Michael Owen goals defeated Arsenal in the FA Cup, but the best was yet to come as the Reds beat Spanish club Alaves 5-4 in a crazy game in Dortmund.
Champions League qualification was also secured on the final day of the season to bring an unbelievable campaign to an end for manager Gerard Houllier.
He arrived in Liverpool from Valencia, fresh from winning the league title and UEFA Cup with the Spanish side.
Benitez moved quickly in the transfer market to sign fellow Spaniard's Xabi Alonso and Luis Garcia and begin his 'Rafalution'.
The Reds had overcome all odds to reach the final, but were losing 3-0 by half-time. However, an incredible second-half saw goals from Gerrard, Smicer and Alonso drew Liverpool level before they went on to win the cup on penalties.
An unforgettable homecoming followed and the trophy returned to Anfield, where it would remain as Liverpool had won it for keeps!
Just a year after Istanbul, the Reds were at it again. After going 2-0 down, goals from Djibril Cisse and Steven Gerrard levelled the score at 2-2 before the Hammers retook the lead.
But, with just seconds remaining, Gerrard struck a magnificent 35-yard volley to force extra-time and later penalties, where Pepe Reina saved three spot-kicks to win the trophy for Liverpool in what will forever be known as the 'Gerrard final'.
The 23-year-old became an instant hero on the Kop as he scored on his Anfield debut against Chelsea.
Torres went on to break several records in his first season at Liverpool, scoring an amazing 33 goals in all competitions!
The Spaniard relinquished his position as Reds boss after six years at the Anfield helm, during which time he helped the club lift the Champions League and FA Cup, as well as the Community Shield and Super Cup.
Benitez also guided Liverpool to second place in the league in 2008-09.
The former Fulham, Inter Milan and Switzerland manager agreed a three-year contract with the club to become the 18th manager in the Reds' history.
He said: "This is the biggest job in club football and I'm honoured to be taking on the role of manager of Britain's most successful football club."
NESV principal owner John Henry said: "We are committed first and foremost to winning. We have a history of winning, and today we want LFC supporters to know that this approach is what we intend to bring to this great club."
Dalglish's first game in charge was an FA Cup third round tie against Manchester United at Old Trafford.
Five months later the Scot was given the job full-time.
The Northern Irishman had learnt from some of the finest coaches in world football, including Jose Mourinho during his spell at Chelsea.
The Reds' new boss managed at Reading and Swansea before arriving at Anfield.