Everton Under-18s coach Paul Tait believes his side “must swallow their medicine and come back stronger” after three second-half goals handed Liverpool all three points in the mini-derby at Kirkby.
Antony Gordon's first-half strike had put the Blues ahead but two goals in three second-half minutes turned the game on its head, before Rafael Camacho added a third five minutes from time.
Tait's side came into the game on the back of three straight wins and went close to opening the scoring on seven minutes.
Stephen Duke-McKenna collected Nathan Moore’s long-ball but the winger dragged his right-footed effort wide of the far post.
The young Blues continued to look dangerous going forward and went close again to taking the lead, this time through Gordon.
Fraser Hornby flicked on Con Ouzounidis' long-ball into the path of the midfielder whose first-time delicate chip went narrowly wide of Kamil Grabara's far post.
The hosts created chances of their own with both Curtis Jones and Camacho firing over, before their best of the half fell the way of Liam Millar.
Some neat build-up play down the Reds left eventually saw Luis Longstaff cross for Millar, but the Liverpool number nine fired straight at Nico De-Frieias in the Everton goal.
But on 38 minutes, the deadlock would be broken in a move started and finished by the influential Gordon.
The Blues number 10 picked up possession in his own half before finding teammate Hornby, who in return picked out Joe Anderson on the edge of the Reds box. The Blues left-winger then instinctively flicked the ball into the path of the onrushing Gordon who coolly chipped the ball over Grabara.
Eight minutes into the second-half, and the young Blues went close to doubling their lead.
Anderson and Hornby combined down the Blues left, before the latter teed up Duke-McKenna who fired just wide from inside the box.
But on 69 minutes, the hosts levelled through Jones. Substitute Glen McAuley saw his effort blocked by De-Frieias before the ball fell kindly to Jones who cut back inside and fired into the bottom corner of the net.
Three minutes later and Steven Gerrard's side turned the game on its head, with Jones collecting his second of the game, when he half-volleyed home Evard Sandvik Tagseth's corner.
Tagseth then turned provider five minutes from time. The midfielder’s pass released Camacho who fired low and hard into the far corner of De-Frieias's net.
"I'm disappointed with the result" said Blues coach Tait speaking afterwards to evertonfc.com.
"We scored a smashing goal and then came in at half-time and spoke about how we can hit them on the counter-attack. But then we've just run out of steam and had a mad 10 minutes where Liverpool have gained momentum and scored two goals.
"Momentum changed once those two goals went in. I can't fault the lads - they put a great effort in but it just wasn't to be. We need to swallow our medicine and go again."
Next up for the young Blues is a home game against Manchester United on Saturday 30 September.