An early goal by midfielder Amy Kane saw Everton pull off a massive shock to win the Women's Premier League Cup.
Their 1-0 victory ended Arsenal's run of 58 successive victories in domestic competitions since their defeat by Charlton in the 2006 League Cup final.
The winner came after seven minutes, Kane firing a low 15-yard shot into the far corner from Jill Scott's cross.
Arsenal had chances to equalise, with Kelly Smith's deflected shot hitting the bar, but could find no way through.
Everton's victory was their first against the Gunners since beating them 3-0 in the 2005 FA Cup semi-final.
Manager Mo Marley, who captained the Toffees team defeated in the 1999 League Cup final by Arsenal, said: "This is a fantastic night for Everton.
"I've been ballooning chances over the bar of late"
"It's the first time since we beat Arsenal in 2005 that the players have shown the absolute belief in themselves that they showed on that occasion.
"Now we have to build on this - and it will hopefully be the start of Everton becoming a successful team winning trophies on a regular basis."
Match-winner Kane added: "I've been ballooning chances over the bar of late and the girls reckoned I couldn't score.
"But I kept telling them I was waiting for the cup final - and I showed them! It was a great team performance and a deserved win."
Defeated Arsenal boss Vic Akers admitted: "We just didn't perform. We were lacklustre and didn't want it as much as they did.
"All runs have to come to an end, and although it's bitterly disappointing for us at the moment we have to pick ourselves up and start another run going."
Arsenal might have equalised shortly after Kane's goal but Smith had her 20-yard drive tipped over the top by keeper Danielle Hill.
Five minutes later, the England striker was denied again when left-back Rachel Unitt managed to divert her clever lob on to the bar.
Smith and right-winger Karen Carney both missed the target as the Gunners built up the pressure.
606: DEBATE
But they almost went further behind four minutes before the break, when striker Natasha Dowie headed midfielder Fara Williams' free-kick over the bar.
The Gunners regained the initiative after the break and Hill had to make goal line saves in quick succession from a Lianne Sanderson and her strike partner Julie Fleeting.
Everton should have doubled their advantage in the 55th minute, however, Dowie racing on to a through-ball by Williams but the striker shooting straight at keeper Emma Byrne.
Arsenal pressed for the remainder of the game, but their efforts became increasingly desperate as full-time approached.
The nearest they came to an equaliser was when central defender Anita Asante's stoppage time long-range shot flashed just wide.
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