The Spanish champions were never in the contest and offered little or no threat to Reds goalkeeper Jose Reina at Anfield.
The Reds held a 1-0 advantage from the first leg in the Bernabeu, Yossi Benayoun having scored the only goal of the game in Spain.
Liverpool made a quickfire start to the game and just three minutes in Fernando Torres spun away superbly from Fabio Cannavaro and saw his near-post shot deflected behind for a corner by the outstretched leg of Iker Casillas.
The resulting corner was cleared as far as Javier Mascherano and his superb dipping left-foot drive was tipped against the crossbar and over by Casillas.
With 16 minutes on the clock the Reds doubled their aggregate advantage as a long ball forward was missed by Pepe and Dirk Kuyt played a simple pass to Torres, who beat Casillas from close range.
Eleven minutes later it was 2-0 on the night and 3-0 overall as Liverpool were literally handed a penalty.
The Belgian referee adjudged that Gabriel Heinze had handled in the area, despite the ball striking the Real defender on the shoulder and Steven Gerrard stroked home the resulting spot-kick.
The rest of the first half saw Real improve slightly, but by now they were all but out of the tie.
Just two minutes after the restart the tie was stone dead as Ryan Babel's deflected cross from the left was slammed home from 12 yards out by the unmarked Gerrard.
With their cause lost, Real put together their best attack of the game. Sergio Ramos curled in a fine ball to the near post, but Raul lifted it over the top from eight yards.
That proved to be a rare threat as the game descended into a stalemate, with Liverpool having done the necessary hard work earlier on in the evening.
Nine minutes from time Torres went close to a fourth goal for the Reds, but Casillas made an excellent save going away to his left.
Sub Andrea Dossena rounded off another superb night at Anfield as he slotted home with 88 minutes played, following good work by Babel and Mascherano.