Rafael van der Vaart's long-range strike ensured a happy end to the week for Tottenham manager Harry Redknapp.
Van der Vaart beat Scott Loach with a dipping 25-yard shot, but Spurs had to survive a second-half onslaught to reach the FA Cup fifth round.
Spurs' preparations were disrupted by Redknapp's ongoing tax evasion trial.
Although Van der Vaart also hit the crossbar, Watford struck the woodwork twice in a dominant second-half showing and were unlucky not to force a replay.
Spurs, who last won the FA Cup in 1991, rested Gareth Bale, Ledley King and Aaron Lennon but still named a strong side which produced arguably their worst display of the season.
Watford responded marvellously to recover from Van der Vaart's opener against the run of play, and teenager Sean Murray and captain John Eustace struck the same post after the break.
The hosts worked hard from the off to deny Luka Modric and Rafael van der Vaart space and time and, for all Spurs' possession, their first shot on goal did not arrive until the half-hour mark.
Watford, on the other hand, twice threatened in the opening exchanges as midfielder Murray saw his low drive parried by Carlo Cudicini before Prince Buaben hit a swerving shot narrowly wide from 25 yards.
The home side's bold line-up saw forward Troy Deeney causing Danny Rose no end of problems on the Tottenham left, and his cross led to Joe Garner miscuing a clear chance in front of Cudicini.
Spurs were still struggling to make headway in the final third, with reported Newcastle target Adrian Mariappa impressive in the Watford defence, although Jermain Defoe did at least register an effort on target when he linked with Emmanuel Adebayor to shoot tamely at Loach.
Van der Vaart opened the scoring just before the break. Kyle Walker carried the ball from deep inside his own half to find the Dutchman in a rare island of space, and he lashed in a left-footed shot which bounced in front of Loach and into the net.
Redknapp introduced Lennon for the below-par Modric at the break but again it was the Championship side who went close to scoring.
Jake Livermore lost possession on the edge of his own penalty area following a sloppy pass from Cudicini, and when Murray was played in his shot was tipped on to the post before Deeney hit the rebound wide.
Spurs then had a dominant 10-minute spell during which Walker's header was turned over and Van der Vaart curled an effort against the crossbar after a breakaway led by Defoe.
Watford controlled the remainder of the game, with Eustace heading a corner against the post, Joe Garner nodding wide and Nyron Nosworthy seeing his low shot kicked off the line by Cudicini.
But Tottenham clung on to record the win which puts them into the hat for the last 16 and leaves Watford to concentrate on Championship survival.