-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001179110-09-016675.txt : 20091210
<SEC-HEADER>0001179110-09-016675.hdr.sgml : 20091210
<ACCEPTANCE-DATETIME>20091210112807
ACCESSION NUMBER:		0001179110-09-016675
CONFORMED SUBMISSION TYPE:	4
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20091201
FILED AS OF DATE:		20091210
DATE AS OF CHANGE:		20091210

REPORTING-OWNER:	

	OWNER DATA:	
		COMPANY CONFORMED NAME:			Burton Thomas B
		CENTRAL INDEX KEY:			0001352735

	FILING VALUES:
		FORM TYPE:		4
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-51813
		FILM NUMBER:		091232653

	MAIL ADDRESS:	
		STREET 1:		C/O LIQUIDITY SERVICES INC.
		STREET 2:		1920 L STREET, N.W., 6TH FLOOR
		CITY:			WASHINGTON
		STATE:			DC
		ZIP:			20036

ISSUER:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LIQUIDITY SERVICES INC
		CENTRAL INDEX KEY:			0001235468
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-BUSINESS SERVICES, NEC [7389]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			0930

	BUSINESS ADDRESS:	
		STREET 1:		1920 L STREET, N.W.
		STREET 2:		6TH FLOOR
		CITY:			WASHINGTON
		STATE:			DC
		ZIP:			20036
		BUSINESS PHONE:		2024676868

	MAIL ADDRESS:	
		STREET 1:		1920 L STREET, N.W.
		STREET 2:		6TH FLOOR
		CITY:			WASHINGTON
		STATE:			DC
		ZIP:			20036
</SEC-HEADER>
<DOCUMENT>
<TYPE>4
<SEQUENCE>1
<FILENAME>edgar.xml
<DESCRIPTION>FORM 4 -
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0303</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2009-12-01</periodOfReport>

    <notSubjectToSection16>0</notSubjectToSection16>

    <issuer>
        <issuerCik>0001235468</issuerCik>
        <issuerName>LIQUIDITY SERVICES INC</issuerName>
        <issuerTradingSymbol>LQDT</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001352735</rptOwnerCik>
            <rptOwnerName>Burton Thomas B</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>C/O LIQUIDITY SERVICES, INC.</rptOwnerStreet1>
            <rptOwnerStreet2>1920 L STREET, N.W., 6TH FLOOR</rptOwnerStreet2>
            <rptOwnerCity>WASHINGTON</rptOwnerCity>
            <rptOwnerState>DC</rptOwnerState>
            <rptOwnerZipCode>20036</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>1</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle>Pres, COO, Gov't Liquid LLC</officerTitle>
            <otherText></otherText>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable></nonDerivativeTable>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Employee Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>9.05</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2009-12-01</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>4000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>0</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F1"/>
            </exerciseDate>
            <expirationDate>
                <value>2019-10-01</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>4000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>4000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
        <derivativeHolding>
            <securityTitle>
                <value>Employee Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>7.48</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <footnoteId id="F2"/>
            </exerciseDate>
            <expirationDate>
                <value>2018-10-01</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>120000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>120000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Employee Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>10.93</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <footnoteId id="F3"/>
            </exerciseDate>
            <expirationDate>
                <value>2017-10-01</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>75000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>75000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Employee Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>12.89</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <footnoteId id="F4"/>
            </exerciseDate>
            <expirationDate>
                <value>2016-03-30</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>75000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>75000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
        <derivativeHolding>
            <securityTitle>
                <value>Employee Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>3</value>
            </conversionOrExercisePrice>
            <exerciseDate>
                <footnoteId id="F5"/>
            </exerciseDate>
            <expirationDate>
                <value>2015-06-07</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>47500</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>47500</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeHolding>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">These restricted shares will vest, if at all, based on the Issuer's achievement of certain financial milestones.</footnote>
        <footnote id="F2">Twenty percent of this option grant vested on October 1, 2009, and thereafter 1/60th of the option grant will vest each month for forty-eight months.</footnote>
        <footnote id="F3">Twenty-five percent of this option grant vested on October 1, 2008, with the remaining options vesting at 2.083% per month thereafter on the first day of each month for the next 36 months.</footnote>
        <footnote id="F4">Twenty-five percent of this option grant vested on March 30, 2007, with the remaining options vesting at 2.083% per month thereafter on the first day of each month for the next 36 months.</footnote>
        <footnote id="F5">These options became fully vested on July 1, 2009.</footnote>
    </footnotes>

    <remarks>No non-derivative securities are beneficially owned.</remarks>

    <ownerSignature>
        <signatureName>/s/ James E. Williams, by power of attorney</signatureName>
        <signatureDate>2009-12-10</signatureDate>
    </ownerSignature>
</ownershipDocument>
</XML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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