The Italian forward came off the bench in the 75th minute and struck the decisive blow eight minutes later, turning Adam Lallana's cross home from close range.
We came from behind twice as first Harry Kane cancelled out Lazar Markovic's opener and then Mousa Dembele levelled at 2-2 but Balotelli had the final word to end a run of three successive wins in the Premier League and inflict only our second loss in the last 11.
There was nothing in it, however and the stats showed Liverpool's 16 shots to our 14 and us just edging possession.
Mauricio Pochettino named an unchanged side from the one that was triumphant over Arsenal on Saturday in the North London derby. On the bench, there was a return for Andros Townsend with Benji Stambouli making way.
Statistically speaking it was a mouth-watering encounter with ourselves and Brendan Rodgers’ side both having lost only of our last 10 Premier League games, while the history books showed only five goalless draws between us and the Merseyside club since the formation of the Premier League.
We were keen to buck the trend of recent results between the two clubs, though, with Liverpool having won the last four games.
The opening exchanges saw us carve out two half-chances with Erik Lamela the orchestrator of both. First after six minutes he squared the ball for Danny Rose to slice one wide from distance before a minute later he attempted to play in Kane but his pass was over-hit and Simon Mignolet was able to scramble it clear. He appeared to catch the forward in the process but our penalty appeals fell on deaf ears.
The home side began to take control however and were almost gifted the lead when Ryan Mason gave the ball away to Daniel Sturridge who drove into our box but saw his shot well saved by Hugo Lloris.
It was a sign of things to come as four minutes later our captain produced a stunning one handed save to his right to deny Sturridge again from Lazar Markovic’s cut-back.
Just two minutes later though, the home side grabbed the lead. Markovic picked up the ball midway inside our half and ploughed into the left channel before shooting across Lloris and into the bottom corner. The Frenchman got a hand to it but was not able to keep it out as Anfield erupted.
The goal saw the game open up and we responded well, almost levelling within two minutes. Jan Vertonghen made an interception on the halfway line before striding with authority towards the Liverpool goal. He slalomed past two challenges before slipping in Christian Eriksen but his shot was well blocked by Emre Can.
It was becoming end to end stuff as the home side were next to go close when Sturridge pounced on a stray pass from Nabil Bentaleb but Eric Dier recovered well and showed great strength to do enough to force the England striker to fire over.
Six minutes later though and we were level through the man of the moment Kane. We had been knocking the ball around on the edge of the Liverpool box when Lamela slipped it to Kane in the right channel and with the home side’s back line stepping up, the striker had time to compose himself before squirming a shot through the legs of Mignolet to level the scores.
Until then it had been breathless with the two sides pressing the life out of each other, forcing several frantic turnovers. But the Kane strike seemed to bring about a degree of tranquillity as the half drew to a close.
That tranquillity was almost shattered in injury time when the lively Jordon Ibe crossed from the right and we failed to clear, leaving Sturridge to fire a cheeky back heel against the post.
There were no changes at the interval and despite looking in control of the opening exchanges, we fell behind again eight minutes into the second period from the spot. Sturridge was the man who wriggled inside our box and was brought down by Rose. The referee's assistant signalled for a foul and the penalty was given. Liverpool skipper Steven Gerrard was the man who took it and though Lloris guessed the right way, he was unable to keep out the kick.
As was the case in the first half, we almost levelled immediately. Mason led the charge driving towards the Liverpool box and when he was tackled the ball fell kindly to Lamela who hit a rasping drive from the edge of the box that Mignolet expertly tipped over the bar.
The goal seemed to give us renewed focus and just after the hour mark again we were level. Kane was fouled by Gerrard near the corner of the Liverpool box allowing Eriksen to bring the best out of Mignlolet again with a dipping free-kick. The keeper could only parry out to the alert Kane who duly squared for Dembele to bundle the ball home from close range for his first goal of the season.
The game was finely poised heading into the final third with both sides looking lively on the break as Alberto Moreno tested Lloris with a low toe poke that was well saved. Mason made way for Paulinho with 20 minutes left to give the midfield some fresh legs, while Dembele in front of him continued to impress with his surging runs to lead our counter.
Balotelli arrived but the chances were starting to dry up at both ends.
However, with 83 on the clock, Lallana broke into the box on the right and drilled in a low cross that Balotelli converted from close range.
Roberto Soldado was introduced as we pushed for a late equaliser but on this occasion, it wasn't to be.
Liverpool: Mignolet, Can, Skrtel, Sakho, Moreno, Gerrard (Lovren, 68), Henderson, Markovic (Lallana, 79), Coutinho, Ibe, Sturridge (Balotelli, 74). Substitutes (not used): Ward, Johnson, Lambert, Allen.
Spurs: Lloris; Walker, Dier, Vertonghen, Rose; Bentaleb, Mason (Paulinho, 69); Lamela, Dembele (Soldado, 85), Eriksen (Chadli, 80); Kane. Substitutes (not used): Vorm, Davies, Fazio, Townsend.
Goals: Liverpool - Markovic (15), Gerrard pen (53), Balotelli (83). Spurs - Kane (26), Dembele (61).
Yellow cards: Liverpool - Skrtel (41), Sakho (45), Gerrard (60). Spurs - Mason (24), Eriksen (28), Dembele (63), Walker (73), Paulinho (88), Kane (90+2).
Referee: Phil Dowd.