Honours Won : League Championship (1986), FA Cup (1986), Charity Shield: Shared (1986), League Championship (1988), Charity Shield (1988), FA Cup (1989), Charity Shield (1989), League Championship (1990), Charity Shield: Shared (1990)
Runner-up : League Cup (1987), League Championship (1987), FA Cup (1988), League Championship (1989)
Fagan handed over the reins to striker Kenny Dalglish, who had established himself as a world class player and now wanted to prove himself as a manager.
By the end of September the league table was being led by Manchester United (who had won all of their first 10 league games), with Liverpool nine points behind in second place. By Christmas, however, the gap between Liverpool and United had been narrowed to four points, with Everton – along with surprise title challengers West Ham United, Chelsea and Sheffield Wednesday – close behind.. A home defeat by league leaders Everton in late February left Liverpool with an eight point gap to close. Eleven wins and a draw in the last twelve matches, meant the league title was finally sealed on the last day of the season as they won 1–0 at Chelsea. The winning goal by Kenny Dalglish ensured they finished two points ahead of runners-up Everton. Hopes of a unique domestic treble ended on 5 March when Liverpool were edged out of the League Cup in the semi-finals by Queen's Park Rangers, one of the First Division's least fancied sides. However, their FA Cup run, which included three victories after extra time, put Liverpool in the FA Cup final – where they took on Everton on 10 May. An early goal by Gary Lineker gave the blue half of Merseyside the lead, but the tables turned in the second half as Ian Rush scored twice and Craig Johnston hit the other goal as Liverpool ran out 3–1 winners to become only the third club of the 20th century (and the fifth since the formation of the Football League in 1888) to win the league title and FA Cup in the same season. It was a perfect first season in management for Kenny Dalglish, marred only by the fact that UEFA had voted for the ban on English clubs in European competitions to continue into the 1986–87 season, so there was no question of Liverpool being able to challenge for another European Cup triumph.
1986–87 saw Liverpool face competition from an even bigger number of clubs for the league title, which they had now won 16 times. Wimbledon, playing their first season as a First Division club and only their tenth in the Football League, were the leaders in early September, with Liverpool fifth. They were still fifth at the end of October with Nottingham Forest leading the way. On Boxing Day 1986 Liverpool suffered their only league home defeat of the season – 1–0 to Manchester United, leaving Liverpool fourth in the league and seven points behind leaders Arsenal, who after a few lean seasons were being rejuvenated impressively by new manager George Graham. Late January saw Liverpool fall victim to one of the biggest shock results of the season, when they lost 3–0 to Luton Town (a First Division team but one still lacking a major trophy to their name) in an FA Cup third round, second replay. However, the first hurdle exit from the FA Cup gave them more time to concentrate on their league title challenge, and by the end of February they were level on points with Everton at the top of the league, with Arsenal still pushing them hard – along with surprise title challengers Luton Town and Norwich City.
Before the season began, star striker Ian Rush had decided to move to Juventus at the end of the campaign in a £3.2million deal. Rush was still one of the highest scorers in the league, but with player-manager Dalglish knowing that his playing days were numbered, and being doubtful of fellow striker Paul Walsh's ability to be Liverpool's main striker, he made a mid-season move for 28-year-old Oxford United striker John Aldridge, who partnered Rush until the end of the season.
Liverpool also reached the League Cup final that season, but lost 2–1 to Arsenal.
Liverpool were clear leaders of the First Division by mid March 1987. However, an uncharacteristic run of five defeats in the final nine games of the season let in challengers, Everton. A 1–0 defeat to Coventry City on 2 May effectively ended Liverpool's title bid, and Everton won their game the next day to ensure that the Anfield boardroom was left without a trophy for only the second season in a decade.
Rush departed to Juventus when the season ended, but the 1987 close season saw two high profile signings by Kenny Dalglish, who paid a national record £1.9million for Newcastle United and England striker Peter Beardsley and a further £900,000 for Beardsley's England team mate John Barnes from Watford to complete a new-look attack to combine with John Aldridge.
UEFA once again voted for the ban on English clubs in European competitions to continue for at least another season, meaning that Liverpool would not be able to compete in the 1987–88 UEFA Cup. Indeed, the recommendation that they should serve an extra three years once the ban had been lifted on other English clubs made it seem likely that Liverpool's European isolation would now continue into the 1990s.
1987–88 would prove to be one of the greatest seasons in Liverpool's history. Repairs to the terraces at the Kop end meant that Liverpool did not play a home match until 12 September. The consequent games in hand on the teams around them helped Jim Smith's Queen's Park Rangers to the top of the league at the end of September. But by Christmas Liverpool remained unbeaten and were seven points clear of nearest rivals Arsenal. It wasn't until 20 March that their record 29-match unbeaten start to the league season was ended, and even then it mattered little as Liverpool were 14 points ahead of their nearest rivals (a resurgent Manchester United). They put their title win beyond all doubt on St George's Day with a 1–0 win over Tottenham Hotspur at Anfield.. John Aldridge was the First Division's leading goalscorer with twenty five goals, whilst John Barnes and Beardsley also featured in the top ten with fifteen goals apiece. The new forward line was undoubtedly the most formidable in the league.
Liverpool also reached the FA Cup final that season, taking on Wimbledon – one of the league's newest members, having completed only their 11th season as a Football League side and their second as First Division members. Wimbledon produced a major shock as they won 1-0 through a header from midfielder Lawrie Sanchez. The game was also notable for the first ever penalty to be missed in an FA Cup Final - John Aldridge's 61st minute being saved by Wimbledon keeper Dave Beasant. Liverpool were denied what would have been their second double in three seasons.
UEFA then voted for the ban on all English clubs in European competitions to continue for a fourth season, meaning that Liverpool once again missed out on the chance of another European Cup bid.
Ian Rush returned to Liverpool for the 1988–89 season for a national record fee of £2.8million, after an frustrating spell at Juventus. His return sparked rumours about the future of John Aldridge and Peter Beardsley, with it seeming possible that one of these players would be forced out of the club by the return of Rush. But it did not quite happen that way. Dalglish decided to operate a 4-3-3 formation so Rush could play alongside both of these players, though a series of niggling injuries hindered him and he was restricted to seven goals from 24 First Division games in his first campaign back on Merseyside.
Rush's slightly less than rip-roaring start to his second Anfield spell was symbolic of Liverpool's unremarkable form. Only at the beginning of March did a sequence of winning results bring them into contention for the title. Even by the end of that month they were still five points off the top of the league, now standing third behind leaders Arsenal and second placed Norwich City.
One of the worst tragedies ever to hit sport occurred on 15 April 1989. Liverpool travelled to Hillsborough Stadium for the FA Cup semi-final where they took on Nottingham Forest. Just six minutes into the game, play was halted as it became evident that fans were being crushed in the overcrowded Leppings Lane end of the ground. Fans were pouring over the security fences in an attempt to escape the mayhem, and before long it was becoming clear that people were being seriously injured and possibly even killed. 94 fans died that day in a tragedy which soon became simply known as "Hillsborough". A 95th victim died in hospital from his injuries four days later. The death toll became 96 in March 1993, when Tony Bland died after being in a coma for nearly four years. Liverpool players and staff were commended for their behaviour in the aftermath of the tragedy.
For a while it seemed as though the 1988–89 FA Cup campaign would be cancelled, but the FA soon decided that the competition would go on. The semi-final was played again at Old Trafford three weeks later. Liverpool defeated Nottingham Forest 3–1 to book a place in the final against Everton – the second Merseyside FA Cup final in four seasons. Liverpool's resurgence in the league had continued, and a 5–1 win over relegation bound West Ham United in the penultimate game of the season saw them open up a three point lead over Arsenal. Ironically, Arsenal were their opponents for the final league game of the season at Anfield, and would have to win by at least two clear goals to deprive Liverpool of a unique second double. As the game entered its final minute, Arsenal were leading 1–0 but that would be enough to keep the league title at Anfield and see Liverpool make history, but with only seconds remaining Arsenal midfielder Michael Thomas scored the dramatic goal that saw the league title head to Highbury for the first time since 1971. UEFA voted for the ban on English clubs to continue into the 1989–90 season, and so Liverpool were unable to make a challenge for the UEFA Cup Winners' Cup.
1989–90 began with much anticipation about the season that lay ahead and who would be challenging for the honours. Liverpool and Arsenal were the inevitable title favourites of many observers, but teams like Manchester United and Tottenham Hotspur were also mentioned as possible contenders following a series of high profile signings. Liverpool began the season well enough, but a 4–1 defeat at Southampton on 21 October saw them fall into second place behind Everton, who were making a serious bid for the title after two seasons of relatively mediocre form. Southampton were also emerging as surprise title contenders, as were Arsenal, although the much anticipated challenge from Manchester United was not emerging.
As the decade ended, Liverpool were leading the First Division with a four-point margin over Aston Villa, now managed by Graham Taylor who at his former club Watford had so nearly pipped Liverpool to the title seven years earlier. The challenge by Everton, in contrast, had ebbed away as their local rivals had slumped from top to 10th in just two months.
By April 1990, Aston Villa had briefly overtaken Liverpool in the league and Kenny Dalglish's men had also suffered a surprise FA Cup semi-final exit at the hands of unfancied Crystal Palace, but in the end they secured their 18th league title by a nine-point margin.
Such was Liverpool's dominance of the domestic scene from 1985 to 1990 that they were the only English clubs who would have qualified for a European competition in each of the seasons that all English clubs were isolated from Europe.
On 22 February 1991, with Liverpool halfway through a two-horse race with Arsenal for the league title and the day after an epic 4–4 FA Cup clash with Everton (a game which saw their rivals come back from a goal down 4 times), Kenny Dalglish dropped a bombshell by handing in his resignation as manager, claiming he could no longer cope with the pressure of managing the club. First-team coach Ronnie Moran took charge of team affairs for several weeks before Graeme Souness was named as the club's new manager. By that stage, Liverpool were slipping behind in the title race and finished runners-up to Arsenal who completed the season with just one defeat from 38 games.
1990–91 also saw the retirement of club captain Alan Hansen after a careering spanning nearly 20 years – the final 14 of which had been spent at Anfield.
It was also the final season at the club for Peter Beardsley, who after four years at Anfield crossed Stanley Park in a £1million move to Everton. 1990–91 saw the arrival of young midfielder Jamie Redknapp and the debut of fellow midfielder Steve McManaman. Both of these players would go on to play a major part in Liverpool's performances throughout the 1990s. In June 1991, Liverpool paid £2.9million (a national record) for Derby County striker Dean Saunders and £2.5million for his team mate, England defender Mark Wright, as Souness looked to achieve title glory at Anfield as a manager just as he had done as a player.
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