Just a couple of days after seeing Toffees striker Tony Cottee score two late goals in a 4-4 draw extra-time in a fifth-round FA Cup replay on February 20 1991 the Scot walked out on his beloved club.
At the time he cited health issues, feeling the pressure not only of the job but of the previous two years during which he had dealt so personally and admirably with the Hillsborough disaster.
"The competition is still as intense and the desire to win is the same as before," said the Liverpool manager.
"I don't think it has devalued - it doesn't matter how long ago it was you have been involved or not or how recently.
"It is a Merseyside derby and like everyone who has been involved in it they think it is the most important one.
"But people in Birmingham think theirs is the biggest, Rangers and Celtic think theirs is the biggest - and they are right.
"This is the biggest one because this is the one I am involved in. There is no point in having a league table of clubs you are not involved with."
Asked about his memories of that night at Goodison Park just over 20 years ago and the fall-out from it Dalglish added: "We've been through all that many times before and there is no point in revisiting it.
"But if we get four goals on Saturday I'll be delighted. If we get four it will be entertaining but I don't think it will be entertaining for the Blue half."
Dalglish has experienced many derbies but he picked his highlights as being an emotional 1989 FA Cup final, which Liverpool won 3-2 against the horrific backdrop of Hillsborough barely a month earlier.
That was closely followed by the 1986 final, a fixture which enhanced the game's reputation as the "friendly derby".
"The most poignant derby was the 1989 FA Cup final, not just because we won but for the whole city of Liverpool," he said.
"Another poignant one was the final in 1986 when you saw fathers going to the game with their kids, one in red and one in blue.
"That spoke volumes for the city in how the people could conduct themselves.
"It would be easy for us to say it is the friendly derby - it probably is the most friendly in the Premier League - but whether it is the same as before is for other people to judge.
"Derbies are always going to be derbies and it is hugely important for this city."
There has been the feeling in recent years that Liverpool's greatest rivals are Manchester United and not Everton but Dalglish said that was not something he had considered.
"Anyone put in front of us is a rival - we are not going to have a pecking order of who our greatest rivals are," he said.
"We just want to play against whoever is put in front of us because that is all we can compete against.
"But we know what a victory in the derby means to the people of Liverpool and how much elation the players get from it.
"There are players who have not played in it before who may play on Saturday but I am sure they understand what it stands for."
New players like Charlie Adam, Jose Enrique, Stewart Downing, Jordan Henderson and January signing Andy Carroll, who arrived after the Anfield derby, are all expected to play a part in their first all-Merseyside clash.
However, Dalglish has no qualms about them coping in what can be a pressurised atmosphere.
"I think the Rangers-Celtic derby has given Charlie a good grounding, Andy has had the north-east derby and Stewart has had Villa-Birmingham - which is not the smallest," said the Scot.
"They may not have experienced this derby but they have all experienced a derby of some sorts."
Huyton-born captain Steven Gerrard will be desperate to play having made two short substitute appearances on his comeback from a six-month lay-off after groin surgery.
But Dalglish remains cautious over the England midfielder.
"The game is not the important thing - Steven Gerrard is the most important," he explained.