American international Clint Dempsey's strike in the 69th minute proved decisive as Fulham moved four points clear of the relegation zone in an entertaining match at Craven Cottage.
Liverpool manager Rafa Benitez chose to rest nine players from the side which beat Chelsea in the Champions League semi-final in midweek. But the visitors wasted no time in finding their rhythm with Craig Bellamy causing plenty of trouble for the Fulham defence.
The Wales international had his first chance in the fifth minute when he wriggled clear before producing a low shot which was well saved by Antti Niemi in the Fulham goal.
Niemi was then called upon two minutes later when Bellamy again raced through on to a pass but the Finnish shot-stopper pulled off another fine save.
Fulham had their chances too. Tomasz Radzinski's teasing cross in the 18th minute was palmed away by Jose Reina under pressure from Brian McBride.
The Cottagers were then narrowly denied a chance to take the lead when Simon Davies' free-kick was headed back across goal by Zat Knight. Vincenzo Montella was waiting at the far post but his spectacular overhead kick was cleared off the line.
Shortly afterwards Fulham captain Michael Brown was seen to have head-butted Xabi Alonso in an off-the-ball incident which was missed by all the officials. The challenge left Alonso with a bloodied nose but Brown escaped unpunished.
In the final few minutes of the first half both sides had chances to take the lead. Robbie Fowler missed a golden chance in the 44th minute when he glanced the ball wide from three yards when it seemed easier to score.
At the other end, Renia was again at full stretch to save smartly from Davies' free-kick a minute later.
After the restart both sides still went in search of the opening goal. Liverpool had chances through Mo Sissoko and Bellamy, who both fired wide, while Fulham's crosses were dealt with by Reina.
Montella was replaced by Dempsey in the 54th minute and he had an immediate impact when he started surging at the Liverpool defence. Indeed it was the American who started and finished the excellent move which put Fulham ahead.
Dempsey picked up the ball and burst forward before playing a neat one-two with Liam Rosenior before firing past Reina in the 69th minute. It was a well-taken goal, and Dempsey's first for the club since his £1.5million move from New England Revolution in January.
The goal sparked a response from Liverpool who began to find their feet late in the match. Harry Kewell, making his first appearance since the World Cup, saw his shot drift narrowly wide, but Fulham held on to win three crucial points.