The skipper netted three in 20 minutes after Ryan Babel broke the spirited Londoners' stubborn resistance on the stroke of half-time.
Sami Hyypia completed the rout in a match which saw Jamie Carragher make his 500th appearance for the Reds.
Rafa Benitez was taking no chances as he welcomed back big guns Gerrard and Fernando Torres for the tie.
And the Reds looked to expose the massive gulf in class between the teams in the opening minutes as they slickly spread the ball around the sodden turf.
The first chance fell to Peter Crouch on five minutes but the beanpole striker headed Jermaine Pennant's cross wide.
Then Gerrard found winger Babel in acres of space but the Dutchman's wicked curler struck the inside of the post with Luton keeper Dean Brill beaten.
Struggling Luton were being hit by wave after wave of Liverpool attacks as Benitez's men looked like they could run up a cricket score.
Despite the early pressure, the Londoners fought well to keep their Premiership opponents at bay as they defenders threw their bodies at everything.
They even managed a shot on 18 minutes but Calvin Andrew screwed his effort wide.
Liverpool's early dominance faded and, until Babel fizzed another shot over the bar on 38 minutes, the League One side looked comfortable and even mustered the odd attack.
But the flying Dutchman was not to be denied a third time and fired Liverpool ahead on the stroke of half-time after latching on to a clever pass from Torres and fizzing a low drive past Brill into the corner.
Five minutes after the break it was two. Pennant sped down the right wing before looping over a ball to Crouch, who nodded the ball for Gerrard to head in from six yards.
Luton barely had time to gather their thoughts before they were three down as the Reds tore into their defence.
Gerrard swung a corner to the far past and the towering Hyypia rose to head the ball in off the upright.
The goal blitz in front of the Kop shattered the Hatters, but the rampant Reds were far from finished and on 64 minutes the brilliant Gerrard netted his second.
The skipper was left unmarked on the edge of the box as the ball fell loose and he passed it into the corner with effortless ease.
This was the Gerrard show and seven minutes later the midfielder notched his hat-trick with a wicked 25-yard curler that flew between two defenders with the Luton keeper rooted to the spot.
Benitez had the luxury of taking off star man Gerrard and striker Torres as Liverpool strolled to victory in the end, but Kevin Blackwell's men fought tirelessly to the final whistle.
But in the end the gap in quality was just too great.