The 45-year-old, himself a Premier League winner, believes the growing expectancy around Anfield could cause the Reds to stutter and isn't convinced they can deal with the pressure
Ahead of Sunday's clash with Spurs at Anfield, Brendan Rodgers' side sit second in the standings, just a point behind leaders Chelsea and two ahead of Manchester City, who have two games in hand on the two sides above them.
The Reds thrashed Tottenham 5-0 earlier in the season - a game that resulted in Sherwood replacing Andre Villas-Boas at the helm of the north Londoners - but while the former England international has the utmost respect for the Merseysiders, he says that he saw signs of edginess in their 2-1 victory over Sunderland in midweek.
“The pressure’s on Liverpool," the 45-year-old, who won a title with Blackburn in 1995, told reporters on Friday.
"You sensed it a little bit the other night [Wednesday], when Sunderland got back into the game.
“After winning so many titles in their time they’re very close, one point off the top. They’re absolutely flying, they’ve got a strike partnership [Luis Suarez and Daniel Sturridge] who are the best the Premier League has seen for a very long time, and they’ve given themselves a real chance.
“Now they have to believe that they’ve got something there that might fall through their grasp and might slip away.
"And, believe me, that’s a really bad feeling to have, because perhaps you don’t play with the freedom that you normally played with earlier on in the season.
“It all depends on how they can hold their nerve, how many players they’ve got within their squad who have done it previously.
“Obviously Manchester City and Chelsea would have to be favourites because of the players they’ve got who have actually crossed that line and done it previously.
“But Liverpool have got from seventh last year and now they must be believing, with eight or nine games left, that they can actually win this Premier League title.
“I’d still tip Man City. They have got that firepower, as well as Liverpool have. It just boils down to whether Liverpool can cope in the run-in, because it is nothing like anything else.
“Whatever has gone before, now that you guys [in the media] have been talking about them in terms of winning the title, it makes a hell of a lot of difference when you’re warming up and you’re going out there and the expectancy is on you.
“I know that myself from doing it. At one stage we were well clear with a game in hand when we won the title [at Blackburn]. We managed to scrape through at the last. We were shot and we managed to get over the line.
“People started talking about us as title winners and that is coming from a side who finished fourth and then second and then first - not from seventh to first. It will be very interesting to see how they cope with it.”
Sherwood confirmed that Emmanuel Adebayor is a doubt for the match due to a cut on his heel, while Vlad Chiriches will continue his recovery from injury by turning out for the Under-21s on Friday afternoon.