Two Mathieu Flamini goals saw Arsenal defeat North London rivals Tottenham 2-1 at White Hart Lane.
The French midfielder converted from close range before Calum Chambers’ own goal levelled things up. However, the 31-year-old smashed home a superb 20-yard volley to see Arsene Wenger’s side progress to the fourth round.
In another big derby, Aston Villa snuck by Birmingham City at Villa Park.
After a cagey opening 45 minutes, Rudy Gestede headed home the winner on 62 minutes from Jordan Amavi’s cross.
At St James’ Park, things went from bad to worse for Steve McClaren as his side were dumped out 1-0 by Championship outfit Sheffield Wednesday.
Despite fielding a strong XI, the former England boss was beaten by Lewis McGugan’s strike 14 minutes from time.
Liverpool were also close to continuing their poor run of form but they saw off a dogged Carlisle United on penalties at Anfield.
Debutant Adam Bogdan was the Reds’ hero as he saved three spot kicks after the game finished 1-1 after 120 minutes; Derek Asamoah equalising for the League Two side after Danny Ings had netted his second goal in as many games.
Holders Chelsea continued their revival with a comfortable 4-1 win at League One high flyers Walsall.
First half goals from Ramires and Loic Remy were added to after the break by Kenedy and Pedro. James O’Connor had earlier pulled a goal back to make it 2-1 to the Blues at the interval.
Premier League leaders Manchester City cruised to a 4-1 win at Sunderland in a repeat of the 2014 final.
Manuel Pellegrini fielded a very strong side for the trip to the Stadium of Light and he saw his team wrap it up in the opening 36 minutes thanks to Sergio Aguero’s penalty, Kevin De Bruyne’s second strike in two matches, Vito Mannone’s own goal and Raheem Sterling’s second of the season.
The Black Cats improved after the break and pulled one back seven minutes from time with Ola Toivonen’s first for the club.
City’s close rivals, Manchester United, are also in the next round after defeating Ipswich 3-0 at Old Trafford.
Goals from Wayne Rooney, Andreas Pereira and Anthony Martial’s fourth in four appearances saw of the Tractor Boys.
Down in South London, Dwight Gayle’s hat-trick helped Crystal Palace defeat rivals Charlton Athletic 4-1 at Selhurst Park.
After a goalless first 45 minutes, the game burst into life after the break when Fraizer Campbell and Dwight Gayle (pen) put the Eagles two goals up.
Naby Sarr quickly pulled one back for the Addicks but Alou Diarra was then shown a second yellow card for a foul in the box and Gayle converted his second from the spot before completing his treble four minutes from time.
Southampton smashed Championship strugglers MK Dons 6-0 away from home.
The Saints scored three in each half courtesy of braces from Sadio Mane, Jay Rodriguez and Shane Long.
Elsewhere, Leicester defeated West Ham 2-1 and Norwich beat West Brom 3-0 in two all Premier League ties.
Everton came from behind to beat Reading 2-1, Bournemouth beat Preston on penalties after a 2-2 draw at Deepdale, Middlesbrough thrashed Wolves 3-0, Stoke progressed with a 1-0 victory at Fulham and David Meyler’s first half goal saw Hull knock out 2013 winners Swansea.
Capital One Cup fourth-round draw:
Manchester City v Crystal Palace
Liverpool v Bournemouth
Manchester United v Middlesbrough
Everton v Norwich City
Southampton v Aston Villa
Sheffield Wednesday v Arsenal
Hull City v Leicester City
Stoke City v Chelsea