Yossi Benayoun gave the Premier League side the lead with a 43rd minute header at Anfield before Martin Jorgensen scored a 63rd minute equaliser for the Italians.
Gilardino won it with seconds remaining after converting a Juan Vargas cross.
With Fiorentina safely through to the last 16 and five-times European champions Liverpool resigned to playing in the Europa League next year, this was a dead rubber in terms of placings in Group E.
Liverpool captain Steven Gerrard said his side were not good enough to progess to knockout phase after they secured just seven points from their six group games.
"I think we've been unlucky tonight but we've not been good enough," he said .
There was some encouragement for Liverpool fans in the shape of midfielder Alberto Aquilani. The 20 million pounds signing from Roma in August had made just three substitute appearances since his move but showed some decent touches on his first start before being substituted after 75 minutes.
This was not the way Liverpool had intended to say farewell to the competition after a disappointing group stage campaign.
With nothing to play for but pride and with a titanic Premier League game against Arsenal on Sunday, Liverpool coach Rafa Benitez used the game to give some of his fringe players a chance to shine in the Champions League spotlight.
Liverpool-born defender Stephen Darby was handed his first senior start at right-back and he was kept busy along with Diego Cavalieri, the second-choice keeper.
The hosts would have been behind at halftime if Cavalieri had not produced a superb reflex save to keep out Lorenzo De Silvestri's 33rd minute header while the Brazilian also saved Daniel Agger from embarrassment after the Danish defender's weak backpass threatened to let in Mario Santana.
Cavalieri was also forced to beat away an awkward long-range effort from Riccardo Montolivo before Benayoun broke the deadlock against the run of play.
It was made by Steven Gerrard, the captain making his 501st appearance for the club. After winning a free-kick just outside the penalty area on the right, Gerrard delivered a fine cross for Benayoun to head home.
Jorgensen, who had earlier blazed over the bar, kept his composure to equalise with a low finish after slack marking in by the hosts.
The game appeared to be drifting towards a draw when Gilardino hit the winner in front of his side's delirious supporters.
Benitez denied that his side lacked concentration after conceding another late goal - something they did in the two games with Lyon.
"No, not really," said Benitez, when asked about whether he was worried by his team's lack of concentration.
"Tonight was just a mistake and something that can happen."
