The 29-year-old was sent off for the Gunners with just 24 minutes on the clock in the first leg of their Carabao Cup semi-final, after he took down Diogo Jota as the Reds ace raced clean through on goal in the 0-0 draw at Anfield.
It was his Xhaka's second dismissal in just 13 matches this season and his fifth in total since joining the north London club from Borussia Monchengladbach in 2016.
Patience with the Swiss will undoubtedly be wearing thin among Arsenal fans, though they will be happy that their side managed to keep Liverpool at bay and earn a deserved draw at Anfield.
Nevertheless, Highbury legend Keown believes the time may be right to part ways with Xhaka, saying he is not of the quality required at the club going forward.
"He has a manager that loves him but I feel if Arsenal are going to be successful going forward, then Xhaka is not the quality that Arsenal really need," Invincibles great Keown told the White and Jordan show.
"People are talking about ill discipline, Jim [White] was big on that last weekend saying to me about how [Patrick] Vieira was a disgrace getting sent off a number of times.
"I'd take that any day in terms of the all-round package that player had. I'm not sure Xhaka is in that privileged position.
"If I'm one of the players, I wouldn't even been able to look at him for what he's put his colleagues through.
"It's happening again and again and it's embarrassing what happened at the Etihad [in Arsenal's late 2-1 defeat to Man City, which again saw Xhaka sent off].
"The manager clearly wants him, he put him straight back in the team.
"They do need him at the moment, so what he has to do is clean up his act."
Xhaka has apologised for his actions but Keown believes the player should even consider giving an explanation for his sending off after his reckless challenge on Jota.
"I just don't understand what was in his mind," he added. "We could almost do with an explanation from the player.
"That's the second time he's been sent off this season and left the team exposed.
"The last time at City he got two yellow cards and was sent off and they got absolutely hammered."