David Ngog, Ryan Babel and Maxi Rodriguez scored to spoil Houllier's first competitive return to Liverpool since his six-year spell in charge of the club ended in 2004.
Liverpool rose four places to 22 points, ahead of West Bromwich Albion on goal difference and seven points behind the Champions League qualifying places.
Houllier's Villa side is just two points above the relegation zone in 16th place.
Liverpool created the platform with two goals in three first-half minutes at Anfield, with Ngog getting the first in the 14th. Martin Skrtel's header from a corner kick was heading just wide of goal, but Ngog dived to head it past goalkeeper Brad Friedel.
Villa hardly touched the ball before conceding the second goal. Lucas Leiva chipped a pass forward to Babel and the Netherlands forward smashed a shot across Friedel and into the net.
Babel came close to scoring again but Maxi got the third in the 55th, with a right-foot shot into the top corner from about 18 meters (yards).
Liverpool's fifth straight home win leaves it 10 points behind leader Arsenal, which moved into top spot with a 2-1 win over Fulham on Saturday. The Gunners overtook Manchester United after its rival's game against Blackpool was postponed because of a frozen pitch.
