A first-half brace from Rio Morgan saw Town defeat Liverpool in the fifth round of the FA Youth Cup.
With a crowd of 2,649 in attendance at Portman Road and the Blues' first-team players and staff watching on from their Cambridge hotel, Woody Williamson also continued his heroics in the competition with a penalty save after the interval as Sam Darlow's side booked their place in the last eight.
Town began the game at lightning speed and created a golden chance inside the opening minute. Nico Valentine raced onto a ball over the top before driving into the box before seeing a low shot saved by Liverpool 'keeper Luke Hewitson.
The young Blues continued to threaten and, with just eight minutes on the clock, moved into a deserved lead. Following a well-worked move down the right side, Valentine's shot from the middle of the box was turned away by an impressive reaction save from Hewitson. Morgan was in the right place, though, to squeeze home the rebound from close to the penalty spot inside a busy box.
Liverpool should have equalised five minutes later but Bobby Clark headed over from inside the six yard box following Josh Davidson's cross from the right.
Gerard Buabo went agonisingly close to doubling Town's advantage inside an enthralling first 15 minutes. The forward, having got goalside of his marker, fired a powerful effort onto the underside of the crossbar with Hewitson beaten.
Morgan doubled his and the Blues' tally in first-half stoppage-time. The right-sided attacker skipped past his marker on the corner of the box before drilling a low shot into the back of the net.
Williamson was called into action early in the second half, making a save down to his right to turn Trent Kone-Doherty's shot around the post.
Morgan, searching for his hat-trick, became the second home player to be denied by the woodwork shortly afterwards, with his volley from 25 yards bouncing off the top of the crossbar.
A combination of Dan Cousens and Williamson then denied Clarke after the Liverpool number 10 had cut inside and sent a left-footed effort towards the bottom corner.
The visitors were awarded a lifeline in the game with just over 15 minutes remaining as the referee pointed to the penalty spot following a foul in the box from Osman Foyo.
Terence Miles struck his penalty well but Williamson guessed right, turning it away with a strong stop to maintain Town's two-goal advantage.
Liverpool had the ball in the back of the net with 10 minutes of regulation time remaining but Kone-Doherty was offside when squaring for Jayden Danns to touch home from close range.
Kone-Doherty had another chance late on but he scuffed wide on the volley after a ball over the top of Town's defence.
Town: Williamson, Haddoch (Steele 87'), Cousens, Logan. H. Barbrook, F. Barbrook, Morgan, Manly (C) (Taylor 78'), Foyo, Valentine, Buabo (Corrigan 71').
Subs: Cullum, O'Neill, Davis, Nkansa-Dwamena.
Booked: Manly, Morgan.
Liverpool: Hewitson, Davidson, Scanlon, Miles (C), Hayes-Green, Laffey, Kone-Doherty, Pilling, Clark, Gyimah (Danns 46'), Onanuga (Gift 57').
Subs: Pennington, Trueman, Pinnington, Morrison, Pitt.
Attendance: 2,649.
