Both teams entered the competition in the second round. Liverpool's matches were generally comfortable victories, with the exception of the semi-final against Manchester City, which they won 2–1 over two-legs. West Ham's matches were generally close affairs, they only won by more two goals once, when they beat Burnley 6–0 over two-legs in the second round.
Watched by a crowd of 100,000, the first 90 minutes was goalless and the final went to extra time. Liverpool opened the scoring in the 118th minute, when defender Alan Kennedy scored.The goal was hotly contested as the shot passed over Sammy Lee of Liverpool in an offside position, obstructing the view of the West Ham goalkeeper, Phil Parkes. Controversial referee, Clive Thomas, bizarrely allowed the goal to stand, based on his opinion that Lee was not interfering with play. After the game, the usually placid West Ham manager, John Lyall, uncharacteristically expressed his anger to Thomas and said he "felt cheated". This was later misrepresented by Thomas as Lyall saying that "Thomas had cheated". The Liverpool lead lasted two minutes, as West Ham equalised courtesy of a Ray Stewart penalty, after a Liverpool handball on the line blocked a goal bound header from Alvin Martin. With the final score 1–1, the match was replayed on 1 April, at Villa Park, Birmingham. West Ham went ahead in the opening minutes, when Paul Goddard. However, their lead was short-lived as goals from Kenny Dalglish and Alan Hansen gave Liverpool the lead. No further goals were scored in the second half and Liverpool won the final 2–1 to win the competition for the first time.