Marvin Sordell's first-half double helped lift Watford out of the Championship relegation zone.
Mark Yeates' drilled strike put Watford ahead before Peterborough drew level thanks to Lee Frecklington's fine finish into the top corner.
However Sordell's penalty restored Watford's lead after Grant McCann tugged Prince Buaben's shirt.
Sordell then flicked a header over Paul Jones and into the net, before Emile Sinclair's stroked the ball home.
All five of those goals came in the first half, but there were very few chances in the second period as Watford ended a run of four successive defeats.
Peterborough have yet to record a clean sheet this season and the visitors were behind after just four minutes.
A poor clearance from the Peterborough defence landed at Yeates' feet on the edge of the penalty area and he fired a first-time effort past Jones.
Peterborough equalised 10 minutes later after Frecklington beat Carl Dickinson by quickly switching the ball from his left foot to his right, before rifling the ball into the top corner.
Minutes later McCann's free-kick struck a post after the dangerous Frecklington had been felled by Craig Forsyth.
But it was McCann that conceded the set-pieces which provided Watford with their second and third goals.
First Sordell dispatched a penalty after the Peterborough captain tugged pulled on Buaben's shirt in the area.
And McCann needlessly brought down Buaben again two minutes later and from a Yeates set-piece, Sordell headed home.
Paul Taylor then beat three men with a meandering run before squaring for Sinclair, who stroked the ball into the far corner from just inside the area.
After the interval Yeates repeated McCann's feat of hitting the woodwork with a free-kick and Jones reacted instinctively to deny Sordell from the rebound.
At the other end, Sinclair managed to round Watford goalkeeper Scott Loach but lost control of the ball and a late deflection diverted Taylor's strike just past the post.