An exquisite lob from Diafra Sakho earned West Ham just a second Premier League win of the season as Liverpool were outplayed in a 3-1 result at Upton Park.
Manager Sam Allardyce hailed an "absolutely brilliant" display from his side which upset all the pre-match predictions.
He said: "It couldn't be better, against one of big boys. It's a well-deserved victory, it's not a lucky one, it's not Liverpool having an off day, it's West Ham being absolutely brilliant on the day.
"The first half was outstanding, in fact I thought we should have been three or four up by half-time."
The source of the first goal was former Reds winger Stewart Downing, whose inswinging free-kick found James Tomkins at the back post. His header back across the six-yard box was turned goalwards by Winston Reid, whose header went in off Dejan Lovren.
Sakho then scored with a delicate chip inside the far post to put his side two up inside seven minutes. Initially, it looked as though he may have been intending to cross to strike partner Enner Valencia, but replays suggested otherwise.
Liverpool had to wait until after half-time to strike back when Mario Balotelli pulled down a Jordan Henderson cross from the left and saw his shot blocked by Aaron Cresswell. The ball ricocheted to Raheem Sterling, who drilled a low first-time volley into the far corner. Liverpool manager Brendan Rodgers admitted his team, who have lost three league games already, are not living up to the standards they set last season. He said: "For some reason we didn't get going today. We were 2-0 down very early and from that point it was very difficult for us to come back."
The game came at the end of a week in which Liverpool made their return to the Champions League, but Rodgers would not use the excuse of a European hangover.
"That's something we've got to get used to," he said. "The group has come a long way and the level expected now has grown, but we have to be able to cope with that and at the moment we're not."
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