Manchester City will look back on the 0-0 draw at Anfield with regret having squandered the chance to earn all three points.
Both Liverpool and the visitors struggled to create any clearcut opportunities.
Before the late drama, the best chances of the game fell to Mahrez who was making a rare start.
The Algerian winger fired just wide of Alisson’s post before forcing him into a save a few minutes later.
Pep Guardiola’s side were awarded a late penalty when Leroy Sane was brought down by Virgil van Dijk.
Sergio Aguero usually takes spot kicks for City but had been subbed off for Gabriel Jesus.
The Brazilian wanted to take the responsibility of taking the penalty in front of the travelling fans but Mahrez took matters into his own hands.
The summer signing from Leicester was adamant that he was going to take the penalty and brushed aside Jesus.
Jesus didn’t appear too happy and was consoled by Bernardo Silva who appeared to bring him out of the penalty area.
Mahrez blasted the penalty high over the bar and into the Anfield Road end of the ground.
He had previously missed three of his previous five penalties including one in the Carabao Cup against his new team last season.
Mahrez’s last Premier League penalty miss also came against Man City, for Leicester in May 2017.
Coincidentally, Gabriel Jesus converted a spot kick in the same match.
Guardiola comforted Jesus at the full-time whistle who still appeared frustrated with Mahrez’s decision to take the penalty.
The point takes Man City back to the top of the table ahead of Chelsea and Liverpool.
All three sides have accumulated 20 points with six wins and two draws.