Bolton moved out of the bottom three after taking full advantage of some slack defending to sink Liverpool.
Mark Davies opened the scoring early on when he drifted through the centre and found the bottom corner from 15 yards.
Nigel Reo-Coker added a second when he chested down and slotted in, but Craig Bellamy gave the Reds hope as he lifted the ball over goalkeeper Adam Bogdan.
However, Gretar Steinsson's volley ensured that Bolton picked up their first points over Liverpool since 2006.
Much of the pre-match talk had surrounded Liverpool's lack of goals, their lowest at this stage of the season since the inception of the Premier League 20 years ago.
It was not expected that their defence would come under the same scrutiny, against a Bolton side with the worst record in English senior football, who had won only one of their 10 home games, kept only two clean sheets and lost their last 10 matches against the Reds.
Bolton form encourages Coyle
Only Manchester City had conceded fewer goals than Kenny Dalglish's side, but that was scarcely believable in a shaky opening few minutes.
Davies was first to pierce the Liverpool backline. He was allowed to drift through the heart of the defence from midway inside the Liverpool half, and with three players delaying making a challenge, he fired home clinically.
Moments later, Liverpool full-back Jose Enrique dwelt on the ball for too long on the touchline and was dispossessed by the intrepid Chris Eagles who jinked along the byeline, but his prod across goal failed to find a team-mate.
Liverpool's main hope was an appeal for a penalty after the ball brushed Zat Knight's hand in the area, but referee Kevin Friend was unimpressed with their impassioned pleas.
DID YOU KNOW?
This was the first time Bolton have scored three goals in a league game against Liverpool since 1950
Less than a minute later they found themselves two goals down.
A lack of midfield cover was evident again when Eagles was allowed to ghost through a gap and find Reo-Coker, who controlled the chip and tucked the ball away from six yards.
Striker Andy Carroll, without a goal in his last 10 appearances for Liverpool, was proving more effective as a contributor than a finisher. First, he sent in a dangerous cross from the left, then a neat right-footed pass freed Bellamy whose first-time shot was straight at Bogdan.
However, the same combination gave their team a lifeline. Carroll flicked on and Bellamy raced clear before delicately chipping in his seventh goal of the season.
Dalglish questions Liverpool attitude
It seemed the momentum was with Dalglish's side and that they would gain the upper hand in the second-half, but soon after the interval their defensive frailties were exposed again.
There were question marks about whether Martin Petrov's corner had gone out of play before curling into the six-yard box, but no debate over Steinsson's clinical finish after Trotters defender David Wheater had outjumped a static Liverpool defence at the far post.
Liverpool defender Daniel Agger hit the top of the bar with a rasping 25-yard effort and Bellamy, who was involved in a continual spat with Reo-Coker, tested Bogdan with a low shot.
However, the visitors could not find sufficient quality to salvage something from the trip and now face a critical week to keep their season alive with cup ties against the two Manchester giants.
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