Liverpool manager Joe Fagan bought Walsh for a £700,000 fee in May 1984. Walsh turned down an approach from Italian Serie A side Como to join Liverpool. He joined Liverpool in time to travel with the players to Rome to see them win the 1984 European Cup Final. He made his debut as a substitute on 18 August 1984 in the 1–0 Charity Shield defeat to derby rivals Everton. With Ian Rush injured at the start of the 1984–85 season, Walsh partnered Kenny Dalglish up front, and he scored just 14 minutes into his Anfield debut on 27 August in a 3–0 win over West Ham United. However, he picked up a knee injury in October which caused him to miss six weeks and allowed Rush to re-establish himself as Dalglish's preferred strike partner. He scored 13 goals in 39 appearances in all competitions throughout the 1984–85 campaign, the most significant goal being the equaliser in the last minute of extra-time against rivals Manchester United in the FA Cup semi-finals at Goodison Park. However Liverpool would lose the replay, and also finished as runners-up in the league and European Cup. Walsh started the 1985 European Cup Final against Juventus at Heysel Stadium, but had to come off early in the second half after aggravating a stomach injury; Liverpool lost the game 1–0, though the day would be remembered for the disaster which cost 39 lives.