Darwin Nunez has seven goals in 16 matches for Liverpool and Uruguay this season
The hosts burst into the lead at Anfield as Diogo Jota skipped past a couple of defenders in the ninth minute before burying the ball into the net.
Toulouse responded through Thijs Dallinga, who was played onside by Trent Alexander-Arnold and able to slot in an equaliser after a 40-yard run.
But stand-in captain Alexander-Arnold quickly made amends, crossing for Wataru Endo who headed home his first Liverpool goal in the 30th minute, before Darwin Nunez blasted in a third to give the Reds a 3-1 lead at half-time.
Midway through the second half Nunez glided past Toulouse keeper Guillaume Restes, but struck the post and was thankful to see Ryan Gravenberch score a fourth on the rebound.
Liverpool ultimately cruised to their win as substitute Mohamed Salah scored a fifth in stoppage time, coolly converting a close-range shot in off the crossbar for his ninth goal of the season.
The win means Liverpool cemented their place at the top of Group E, on nine points after three matches, while Toulouse dropped to third, five points off the Reds.
Liverpool are favourites to lift this season's Europa League
Liverpool's focus is undoubtedly on their league campaign, the Reds are three points off top spot.
Jurgen Klopp made eight changes from the side that beat Everton at the weekend, with one eye on Sunday's Premier League match with Nottingham Forest.
Nevertheless, his second string were still clinical, intense and clearly a level above the French Cup winners, with midfielders Endo and Gravenberch particularly impressive.
There was also a first start for teenager Luke Chambers and debuts for substitutes Callum Scanlon and James McConnell while Cody Gakpo returned to action after a month out, coming off the bench midway through the second half.
Liverpool, while creating constant chances, did leave gaps at the back and almost conceded straight after the restart when goalkeeper Caoimhin Kelleher gave the ball away, only for Toulouse's Gabriel Suazo to have his shot blocked on the line by Alexander-Arnold.
The Reds though entertained throughout their win and will advance to the knockouts with two matches to spare if they beat Toulouse in their next Europa League game in two week's time.
-- Courtesy of BBC Sport