Guro Reiten’s 25th-minute goal proved the difference at Kingsmeadow and ended the Reds’ cup campaign at the fifth-round stage.
Solid defensive organisation from Liverpool denied Chelsea the opportunity to convert their early control of possession into anything more meaningful, although Anke Preuss saved from Ji-So Yun with her feet in the 19th minute.
Sophie Bradley-Auckland then cleared off the line from Reiten, but the Norway international put the hosts ahead midway through the first half with a back-post finish.
The Reds responded well to that setback, though, and a counter-attack involving Melissa Lawley and Niamh Charles nearly resulted in Ashley Hodson being found, only for Charles’ pass to be intercepted.