The home side began brightly, Fernando Torres immediately forcing a top-class save from Brad Friedel, with neither Steven Gerrard or Yossi Benayoun able to convert the rebound in a goalmouth scramble.
The opening five minutes saw continued Liverpool pressure, with Rafa Benitez glued to his touchline as the Reds powered forwards, with an energetic Benayoun finding plenty of space cutting in from the left wing.
Twenty minutes in Villa began to look more settled, becoming more comfortable with Liverpool's quick tempo and looking constantly threatening on the counter-attack.
But it was to be a set-piece which broke the deadlock, conceded cheaply 25 yards outside the Liverpool box.
James Milner's shot was weak, but an unfortunate deflection from Lucas on the end of the Liverpool wall saw the ball spin away from Pepe Reina.
The Liverpool keeper remained rooted to the floor in disbelief, as the ball found the left-hand side of his net to hand the visitors the lead.
Five minutes later, in the dying seconds of the half, Villa extended their lead courtesy of Curtis Davies, who rose well above Jamie Carragher to connect with a solid header to beat the hapless Reina.
In the 72nd minute, Fernando Torres pulled a goal back when he found some space in the centre of the penalty area and connected with a well-placed Benayoun cross, delicately volleying the ball into the roof of the Villa net.
However, Villa restored their two-goal advantage three minutes later when Gerrard fouled Nigel Reo-Coker as he powered into the Liverpool penalty area.
Ashley Young stepped up to the spot, and elegantly powered the ball into the right side of Reina's goal.
Liverpool's heads dropped and their attacking threat was all but extinguished as they slumped to their second defeat of the campaign following their opening weekend loss at Tottenham.