Police were called to Prince William Street in Toxteth at 4.30pm on Saturday following reports that a man had been stabbed in the chest.
A Merseyside Police spokesman said the man, aged in his 30s, was taken to hospital where he was pronounced dead.
A man in his 20s was detained and taken for questioning, the force said.
Detective superintendent Dave McCaughrean said: “We are appealing for anyone who was in Prince William Street or the surrounding area, and witnessed the incident or saw any suspicious behaviour to please get in touch.
“A man has tragically lost his life and at this stage, we are treating the incident as targeted, however an investigation is now under way to establish the full circumstances.”
The victim’s family has been informed.
Anyone with information is asked to contact Merseyside Police on 101 quoting ref. 20000568640 or Crimestoppers, anonymously, on 0800 555 111.
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