Rafa Benitez preferred Javier Mascherano to Xabi Alonso in central midfield, while Peter Crouch started up front alongside Dirk Kuyt.
Jose Mourinho was forced to field Michael Essien at centre-back with Ricardo Carvalho out injured, Salomon Kalou partnered Didier Drogba in attack.
The opening minutes were tight and nervy, with play condensed in midfield for much of the time.
After a first 20 minutes of little or no goalmouth action, Liverpool got level on aggregate. Steven Gerrard won a free-kick on the left and rolled the resulting set-piece along the edge of the area for the unmarked Daniel Agger to score with an excellent low, left-foot drive.
Just before the half-hour mark Ashley Cole went into the book for bringing down Jermaine Pennant and soon after Drogba had Chelsea's only chance of the first half. He was fed clear in the inside right channel by Frank Lampard, but his firmly-hit shot was blocked by Jose Reina at his near post.
The closing minutes of the half saw no more chances at either end, with the game still a stifling midfield battle.
Ten minutes after the restart Liverpool came close to a second goal as Pennant got in a superb cross from the right and Crouch's header was blocked right on the line by Petr Cech, with John Terry clearing the loose ball.
Three minutes later the Reds came even closer as John Arne Riise lifted a cross in from the left and Kuyt headed against the crossbar from ten yards out, with Cech totally stranded.
The home side continued to press, but 14 minutes from time John Obi Mikel played in a superb ball for Ashley Cole and his cross was lifted over the crossbar from close range by the covering Jamie Carragher.
The closing minutes saw few clear chances, although Bolo Zenden's right-footer was spilled by Cech, before he recovered quickly to dive on the loose ball.
The first period of extra-time saw both sides still struggling to break down the other, although Liverpool thought they had the crucial breakthrough when Kuyt raced in to net the loose ball after Cech spilled Alonso's long-range drive, but the celebrations were cut short by an offside flag.
Kuyt also had the best opportunity of the second half of extra-time, but with two minutes to play and with time and space in the area, he could only fire his shot straight at Cech from 15 yards.
In the shootout Zenden, Alonso and Gerrard all netted for Liverpool and, with Reina saving from both Arjen Robben and Geremi, Kuyt was left to slot home the winning penalty to send Anfield into raptures.