Jurgen Klopp’s side have emerged as genuine title contenders and they moved one point clear of second placed Chelsea thanks to a scintillating goal spree at Anfield.
The Reds took the lead in the 27th minute when Senegal winger Mane met Philippe Coutinho’s corner with a header that looped past Watford goalkeeper Heurelho Gomes.
Just three minutes later, Roberto Firmino picked out Coutinho on the edge of the penalty area and the Liverpool forward fired home with a fine low strike.
Klopp’s team were three up two minutes before half-time as Emre Can arrived unmarked at the far post to head in Adam Lallana’s cross.
The goals kept coming and Firmino added the fourth in the 57th minute, the Brazilian finishing off Lallana’s cross, before Mane got his second in the 60th minute with a clinical close-range effort from Firmino’s pass.
Daryl Janmaat notched his first goal for Watford in the 75th minute, but there was still time for Liverpool to complete the demolition in the 90th minute through Georginio Wijnaldum’s tap-in.
Liverpool have won seven of their last eight league games and go into the international break with growing belief they can win the club’s first English league title since 1990.
At the Emirates Stadium, Harry Kane marked his return from injury with the equaliser as Tottenham kept their hated neighbours from the Premier League summit.
Arsenal took the lead in the 42nd minute when Tottenham defender Kevin Wimmer headed a free-kick into his own net.
But England striker Kane, who had been sidelined for seven weeks due to ankle ligament damage, equalised for Tottenham from the penalty spot early in the 51st minute after a foul on Mousa Dembele by Laurent Koscielny.
– Frustration –
The result prevented Arsenal from climbing above Chelsea and Manchester City and opening up a six-point gap over Tottenham, who remain fifth, three points below Arsene Wenger’s men and four points off first place.
Wenger was angered by Tottenham’s penalty and said: “From where I sit, it looked harsh. It didn’t look a deliberate foul or that he was dangerous to score.”
Despite his frustration over the spot-kick, Wenger accepted the result was “fair” and Tottenham boss Mauricio Pochettino agreed.
“It’s difficult to say one team deserved it more than the other,” Pochettino said.
Wenger has now gone five league games without beating Spurs, while Mauricio Pochettino is the first Tottenham manager to avoid defeat in his first five top-flight North London derbies.
Although Spurs have now gone seven games without a win in all competitions, they have avoided defeat in their opening 11 league games for only the third time in the club’s history.
Elsewhere, Hull staged a second half fightback to end their barren run with a 2-1 victory over Southampton at the KCOM Stadium.
Southampton went in front in the sixth minute when Curtis Davies fouled Maya Yoshida and Charlie Austin belted the resulting penalty straight down the middle.
But Robert Snodgrass’s excellent finish from 12 yards drew Hull level in the 61st minute and former Tottenham defender Michael Dawson put the Tigers ahead when he glanced in a free-kick two minutes later.
Hull remain in the relegation zone, but their first win in nine league games, ending a run of six successive league defeats, at least offered hope they could avoid the drop.
Later on Sunday, Manchester United travel to Swansea and champions Leicester host West Bromwich Albion.