Despite finishing top of the newly formatted group stage with an impressive 21 points, Arne Slot's side faced a difficult last-16 draw against a formidable PSG, who remain unbeaten in Ligue 1 and, in Slot's words, are "statistically the best team in Europe."
Liverpool held a 1-0 aggregate lead after the first leg, but PSG's Ousmane Dembele levelled the tie in the return fixture.
The two sides could not be separated across 210 gruelling minutes, forcing the contest into penalties, where PSG triumphed 4-1 to seal their place in the quarter-finals.
Slot expressed pride in his team's performance but hinted that he may approach the league phase of next season's Champions League differently.
"I am feeling disappointed about being knocked out. I do feel in the end of the season, it does matter how we presented ourselves in Europe," Slot told the media after the game.
"I just said, we were not in the Champions League last season and this season we really showed ourselves. We can be proud of what we did. We won seven games in a row and then we played with our substitutes and lost against PSV.
"I think we played last week not our best game but today we saw a completely different Liverpool. We go out in a way that I think has impressed Europe.
"It is something now to take into consideration about how much worth it is to end up first in the league table if you can face Paris Saint-Germain in the next round.
"It is what it is. Maybe I am [speaking] too soon now but maybe it would be more fair that after the round in between, the one that wins the league table plays against the team that is lowest position after the teams have played.
"But that is also because we were so unlucky to play Paris Saint-Germain because we could have also gone to the other side of the draw.
"In the end, if you want to win the tournament you have to beat teams like Paris Saint-Germain and that's what we didn't do today after an incredible first 90 minutes of football from us."
Conor Bradley's injury has left Liverpool facing a fresh defensive crisis, with Arne Slot confirming that the young full-back will miss the next seven matches during a demanding stretch of fixtures.
Liverpool may not be able to see Alexander Isak at his peak until next year after the striker opened up on his fitness troubles since his start to life at Anfield.
Liverpool head coach Arne Slot is set to approach Saturday's Premier League meeting with Nottingham Forest with what could be his strongest squad in weeks, as several key players edge closer to full fitness.
Paris Saint-Germain and former striker Kylian Mbappe faced off in Paris's labour court on Monday as the France captain filed a claim for 263 million euros in damages, escalating a legal dispute over his contract and treatment at the club.
