Sadio Mane thought he had given the visitors the lead at the Emirates after tapping home into an empty net.
The ball had fallen to the Senegal international after Roberto Firmino latched onto a bass from Trent Alexander-Arnold and chipped Bernd Leno.
His effort his the post, however, and while Mane tucked home the rebound, linesman Simon Long raised his flag to indicate offside.
But former Premier League referee Peter Walton quickly confirmed the officials had make a mistake.
While Mane was in an offside position when the initial ball was played, he was not involved in this phase of play.
And when Firmino chipped Leno, Mane was behind his Liverpool team-mate, meaning he can not be considered offside.
[Mane] is clearly in an offside position when the ball comes over, but hes is not involved in this phase of play, Waltson told BT Sports.
Mane is then in an onside position when Firmino plays the ball so it is a good goal.
Liverpool squandered a number of decent chances after the disallowed goal, before Arsenal rallied and enjoyed a promising spell before half-time.
Speaking at the break, Manchester United legend Rio Ferdinand said: If we had VAR today they would be in front. They should be 1-0 up.
Former Arsenal and England defender Martin Keown added: The linesman obviously thinks Mane is ahead of the ball but he isnt. Its a mistake.