Craig, who was born in Chester, was joined by Austin Power actor Mike Myers in the stands at Yankee Stadium.
Montenegro international Stevan Jovetic handed the Premier League champions a second-half lead but Jordan Henderson scored to haul the Reds level.
Jovetic put City back in front but England international Raheem Sterling’s later equaliser forced the pre-season friendly to penalties.
Aleksandar Kolarov, Daniel Sturridge, Yaya Toure and Jesus Navas all missed their spot-kicks, leaving Emre Can, Jordan Henderson and Lucas to win it for the Reds.
And 34-year-old Liverpool skipper Gerrard greeted Craig following the pre-season victory.
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