The October 3, 2009 (01:16:00 UTC), Olancha M5.2 earthquake caused extensive liquefaction as well as permanent horizontal ground deformation within a 1.2 km2area earthquake in Owens Valley in eastern California (USA). Such liquefaction is rarely observed during earthquakes of M ≤ 5.2. We conclude that subsurface conditions, not unusual ground motion, were the primary factors contributing to the liquefaction. The liquefaction occurred in very liquefiable sands at shallow depth (< 2 m) in an area where the water table was near the land surface. Our investigation is relevant to both geotechnical engineering and geology. The standard engineering method for assessing liquefaction potential, the Seed–Idriss simplified procedure, successfully predicted the liquefaction despite the small earthquake magnitude. The field observations of liquefaction effects highlight a need for caution by earthquake geologists when inferring prehistoric earthquake magnitudes from paleoliquefaction features because small magnitude events may cause such features.