Jermain Defoe produced two immaculate penalties as the Wearsiders levelled twice after falling behind to strikes from Daniel Sturridge and Sadio Mane respectively.
Defoe's equaliser came in the 84th minute as the former England marksman twice blasted past Simon Mignolet.
Liverpool lead first thanks Sturridge flicking past Vito Mannone from a corner and lead again when Mane reacted first from another set play Sunderland didn't defend properly.
The draw moves David Moyes' men to within one point of safety whilst Liverpool sit five points off league leaders Chelsea.
Sunderland matched Liverpool in a surprisingly competitive opening 45 minutes.
Jermain Defoe had the first strike of note but his low drive was too central from 20 yards, and easily saved by ex-Black Cat Simon Mignolet.
Returning to the Liverpool line up, Sturridge was a constant threat. The England forward started his duel with Vito Mannone when the Italian palmed away his curling effort that was heading into the far corner. Picked out by Mane unmarked it was a great opening and Mannone did well to deflect a shot that was moving away from him at close range.
Soon after Georginio Wijnaldum tested Sunderland's second choice stopper, blasting his effort straight at the 28 year old who was forced to palm over the bar.
Jack Rodwell impressed on his return to the team, forcing Mignolet into a full stretch save, with his low curling effort, which was heading to the far corner. The former England international's effort was reflective of Sunderland's ability to occasionally pin back their more lauded opponents.
Sturridge had another of his several pot shots turned behind by Mannone and this Liverpool pressure told as Sunderland switched off from a basic corner. Dejan Lovren weak volley into the ground was diverted beyond Mannone by Sturridge reacting most quickly in the six yard box, with a deft glancing header.
Sunderland were level quickly, capitalising on an avoidable error from the title challengers. Didier Ndong bundled his way into the area, and went down after feeling contact from Ragnar Klavan's outstretched leg.
Jermain Defoe's penalty was immaculate. He calmly passed into the corner beyond the reach of Mignolet, with remarkable accuracy.
The Wearsiders talisman should have added a second soon after, he raced onto an Adnan Januzaj through ball, but couldn't divert the ball far enough away from Mignolet. The ex-Wearsider got a firm enough hand on the ball to keep it away from Defoe who was trying to round him. Fabio Borini rashly scuffed the follow up, missing aiming at an open goal.
Liverpool settled after Sunderland's wasted opportunity. The game's outstanding player, Sturridge, again testing Mannone with a low curling drive that the Italian had to parry away. Minutes later Rodwell was Sunderland's savoir blocking an Adam Lallana shot after a Roberto Firmino cut back, Mannone was in no man's land, as the England man attempted to shoot into an open goal.
Defoe wasted another half chance failing to control Sebastian Larsson's fizzing through ball wasting a chance to shoot unmarked in the opposition area.
Keen to regain the lead Liverpool pressed straight after the re-start, their first real chance came when Mane failed to convert unmarked from point blank range. The Senegal forward was unable to produce a telling contact glancing his header well away from the home side's goal.
In a much more open second half, Sunderland saw a strong penalty claim turned away when Adnan Januzaj chipped the ball onto Emre Can's arm. The German international was given the benefit of the doubt by referee Lee Mason due to his arm being close to his body and distance between him and the Belgian.
Mannone who was excellent produced his best save twenty minutes from time, stopping Sturridge from close range. The 27 year old was trying to finish after being played in behind by a delightful Lallana back heel. Mannone stayed big and deflected the ball over.
Once again the Merseysiders took the lead from a corner. Sunderland failed to defend the near post with a weak near post Papy Djilobodji header being turned in by Mane. The 24 year old couldn't miss from three yards after Djilobodji could only flick the ball into his path.
Mason handed Sunderland a huge lifeline, blowing for a free kick 20 yards out after Defoe fell on the turn under little pressure. Larsson's goal bound effort was blocked by Mane who clearly reached out an arm stop the shot. Defoe buried the resulting penalty down to his left. This time favouring power over placement with the same result.
A nervous finale saw Sunderland have to withstand five minutes of injury time. Ultimately all Jurgen Klopp's men could manage was a central strike from distance from Lallana, which was comfortably parried away by Mannone.
The draw provides Sunderland a crucial boost after the New Years Eve embarrassment at Burnley. Once again the Black Cats have a fighting chance of survival, after a chaotic Christmas period.