Liverpool's unbeaten league start ended at Goodison Park on 20 March 1988. Wayne Clarke scored the only goal as Everton won 1–0, leaving their neighbours level with Leeds United's 1973–74 record of 29 First Division matches without defeat from the start of a season.
The decisive moment came after fourteen minutes. Bruce Grobbelaar failed to hold Trevor Steven's corner and Clarke drove the loose ball left-footed past Ray Houghton on the line. Grobbelaar maintained that Alan Harper had tripped and impeded him as he went for the ball.
Liverpool recovered from Everton's strong opening and spent much of the match seeking an equaliser. Peter Reid followed John Barnes closely, while Dave Watson and Pat van den Hauwe protected Neville Southall in the centre of Everton's defence.
Craig Johnston, playing in John Aldridge's absence, came closest to breaking through. Harper cleared one effort on the line. Around the hour, Barnes carried the ball out of Liverpool's half and released Johnston on the left. Johnston cut inside Steven, but Southall blocked his shot with his legs.
Everton held on. They had now beaten Liverpool twice that season, having also won October's League Cup tie; Liverpool had won the other league derby and February's FA Cup meeting.
The defeat left Liverpool fourteen points clear of Manchester United, with two games in hand. Their league record stood at 22 wins, seven draws and one defeat.