Brendan Rodgers's side went into the campaign aiming for a top four spot but have exceeded expectations and now sit top of the table with just five games remaining.
Liverpool's title rivals Manchester City and Chelsea both still have to go to Anfield this season, and Keegan believes that the Reds could end their 24-year wait for another league title if they get positive results in those two matches.
"I think most people have been a little bit surprised. I was asked at the start of the season whether Liverpool could finish in the top four and I said they had a chance but that it would be tough. Don't forget, at the start of the season they were without [Luis] Suarez so you thought that would be a major miss," Keegan told BBC Sport.
"As it happened they started off the season very well without him. He came back in and you thought: 'Will he be quite like he was and will there be any backlash from the suspension?' The answer was no. From the first second he got back on the pitch he has never stopped scoring goals. He has built up a great relationship with Daniel Sturridge.
"It has surprised me a little. I think what has helped them more than anything is the fact they got out of the other competitions. They have got both Chelsea and Manchester City to come to Liverpool, and if they win those two games the destiny of the title is in their own hands."
Keegan scored 100 goals in 323 games for Liverpool, winning three league titles, a European Cup, two UEFA Cups and an FA Cup.