The South Yorkshire team came from behind to snatch a dramatic victory in second-half injury time, sending a 6,000 strong partisan away following into raptures.
It took just over 30 minutes for the deadlock to be broken when Ryan Babel's driving run towards The Kop by-line ended in a neat pull back to Dirk Kuyt. The under-fire Dutchman effortlessly found the back of the net from seven yards out.
The Reds played the last five minutes of the first half with ten men. Xabi Alonso was forced to get treatment to an open head wound after a clash with team-mate Lucas.
The Tykes upped the pressure at the beginning of the second half and were duly rewarded with an equaliser on 57 minutes, as Stephen Foster found the back of the net with a driving header from a superb Martin Devaney cross.
The visitors didn't relent as they looked to take advantage of a sometimes shaky Liverpool defence and a nervy looking Charles Itandje in the home goal.
Rafa Benitez chose to stick with starting his second choice keeper, who has played in all previous matches of this season's competition.
Emergency loan signing keeper Luke Steele making his debut for the visitors pulled off several second-half saves and looked considerably more comfortable than his Liverpool counterpart.
The Reds' best chance fell to Harry Kewell, who scraped the crossbar late on with a long-range shot after replacing Babel on 70 minutes.
The introduction of Steven Gerard with 15 minutes to go brought more forward drive to the home team, but they failed to really penetrate a strong Tykes back line who gave it their all.
Calls for what looked liked a stonewall penalty for the away team in stoppage time were ignored by the referee.
This didn't dishearten a buoyant Barnsley who continued for one final attack in which captain Brian Howard found the back of the net with a shot from just inside the Liverpool area to secure a famous cup scalp.