One first-half goal from the Gunners' number 23 took his side in at the break with a lead undeserved on the balance of play.
But two second-half strikes from both Fernando Torres and Yossi Benayoun kept the game hanging in the balance until the closing seconds where points shared seemed a fair result on the night.
With no first-choice striker in the Arsenal line-up, Gunners boss Arsene Wenger still opted for a 4-4-2 formation by pushing Arshavin upfront alongside Nicklas Bendtner, but the Gunners were put on the back foot from the word go.
Torres tested keeper Lukasz Fabianski inside the opening three minutes and efforts from Benayoun and Albert Riera moments later had the Arsenal back four in disarray.
A double save from Fabianski on ten minutes kept the scores level when Benayoun was put through inside the corner edge of the area, but the keeper was quick off his line to spread his body at the feet of the winger before recovering quick enough to prevent an Alvaro Arbeloa rebound.
Wenger's faith in his keeper following his nightmare performance against Chelsea in the FA Cup was repaid with another fine save from a Torres screamer from 18 yards which he pushed over the bar.
A quick counter from Arsenal found Kieran Gibbs furthest forward down the left and after a mix-up between Daniel Agger and Jose Reina in goal, the clearing header fell to Fabregas who drilled his volley a yard wide.
Liverpool were throwing men forward and Torres found himself unchallenged in front of goal on 18 minutes but his almighty whack from outside the box never troubled the keeper who didn't have to move very far.
The home side seemed to be camped inside the Gunners box and a well-placed header by Agger from a Xabi Alonso corner looked to be creeping in but Samir Nasri was perfectly place to clear the ball off the line.
The deadlock was eventually broken on 36 minutes but it was the Londoners who capitalised on some sloppy defending from Javier Mascherano and slotted home against the run of play.
The Argentine dwelled to long on the ball allowing Fabregas to get a foot in and feed Nasri who charged into the box and after some quick feet, rolled it back to his skipper who beat the offside trap and cut it back to Arshavin, who finished off the underside of the bar into the back of the net.
With only four minutes played after the restart Torres equalised after Dirk Kuyt was given two chances to cross the ball and his second found the Spaniard, who did well to find the power needed to beat Fabianski.
Liverpool took the lead on 56 minutes after a rushed clearance from the inexperienced Gibbs at left-back went straight to Kuyt, who swung a deep cross to the back post where Benayoun bravely threw his head at the ball, which looped a yard over the line before being punched back out by the keeper.
The lead swung again after the hour mark with two goals in three minutes from Arshavin, who bagged his second with a stunning solo effort on 67 minutes.
After intercepting a weak header from Jamie Carragher to Arbeloa, the Russian unleashed a rocket from 20 yards into the far corner giving Reina no chance.
His hat-trick was completed as Nasri crossed from the left, but after sailing the ball over his team-mates, a bad clearance from Fabio Aurelio flew directly to Arshavin, who smashed home from eight yards.
The home side were back level on 72 minutes when Riera found Torres with his back to goal holding off Mikael Silvestre and, after taking a touch to control and one to turn, he rifled home from the penalty spot to make it three apiece.
Gibbs then made amends for his previous mistake by heading a Torres effort off the line to prevent the second hat-trick of the game.
Liverpool's title dreams looked in tatters with only seconds of the 90 remaining when a counter-attack led by substitute Theo Walcott saw him running at last man Alonso, before rolling a pass into the late charge from man of the match Arshavin, who smashed in his fourth.
Liverpool's never-say-die attitude was on show once again and the scores were once again brought level three minutes into the five of stoppage time, as Benayoun finished into the corner of the net after latching on to a Ryan Babel flick from Mascherano's cross.