Goals from Anthony Martial and substitute Scott McTominay sealed a momentous derby double for the Reds as we kept up the pressure on place above Chelsea.
With United clinging perilously to a slender first half lead, Old Trafford erupted as McTominay pounced on Ederson's underhit throw-out and steered the loose ball into the empty Stretford End net in the sixth added minute. Martial had earlier given his side the lead with a close range finish from a wonderful scooped Bruno Fernandes ball. City laid siege in the second half but United were simply magnificent and held the back-to-back league champions at arm's length.
Marshalled superbly by the outstanding Harry Maguire, immense Aaron Wan - Bissaka and revitalised Luke Shaw, the Reds held firm to send Guardiola's men to a seventh league loss of the season and leave Liverpool two wins from the title.
It ensured that Ole Gunnar Solskjaer becomes only the second manager to ever beat Pep Guardiola three times in the same season and wrapped up the Reds first league derby double in a decade. Solskjaer's side also beat City in the second leg of the Carabao Cup - albeit ultimately in vain against the eventual winners.
The visitors had started brightly and went close inside the first five minutes. Raheem Sterling, given a torrid time by the colossal Wan - Bissaka, cut inside and saw his goal-bound effort pawed away by the diving David de Gea. United were a constant threat, though and - after Martial had tested Ederson from distance - we began to get on the front foot.
Dan James had a shot saved by the usually unflappable Brazilian, but City failed to heed that warning as United took the lead on the half hour mark. Almost inevitably, Bruno Fernandes (who else?) was involved in things in a goal straight from the training ground. Our quick-thinking maestro caught the Blues defence flat footed as he lifted a gorgeous free-kick over the wall and Martial met it on the volley.
For the second time in a week, United benefitted from a goalkeeping blunder as Ederson - despite getting a glove to the ball - allowed the shot to squirm underneath him and in.
United's transition from edgy to exhilarating had Old Trafford rocking, with the soft centre of Guardiola's team fully exposed as the Reds threatened to run riot.
Fernandes was narrowly unable to turn home a Brandon Williams cross and Fred was very harshly booked for diving when he looked to have been caught by the hapless Nicolas Otamendi inside the area.
De Gea saved well from Phil Foden and Ederson did likewise at the other end, even if James should have cut the ball back to the waiting Fernandes instead of going for glory.
Substitute Riyad Mahrez teed up Sterling but the chance was wasted - extending the latter's personal drought against United - and De Gea tipped away from Gabriel Jesus on the rebound.
Mahrez flashed a shot wide and Foden tested De Gea from distance as City laid siege with United's narrow lead increasingly fragile.
Guardiola's side were desperate now and threw men forward in an attempt to salvage a point. Sterling had a shot blocked and Wan - Bissaka cleared under pressure from Rodri, but there was no way through a magnificent United rearguard.
With time almost up, McTominay pounced on an errant Ederson throw-out to fire in the loose ball from distance with the helpless Brazilian in no man's land.
Old Trafford erupted as we celebrated another memorable derby day success to put the Reds back to within touching distance of Chelsea - but this meant so much more than simply three points.
Overall team performance: 10/10. Every player absolutely immense to a man and from front to back.
United Faithful Man of the Match: Harry Maguire. Colossal.