Hornets striker David Graham missed an early penalty but did score to cancel out Peter Whittingham's opener before goals from strike partner Marvin Sordell and midfielder John Eustace put the home side in control.
Malky Mackay's side were not in action on Boxing Day after their trip to Ipswich was frozen out and the rest proved decisive as they overpowered a lethargic looking Cardiff.
Craig Bellamy was outstanding in the win over Coventry on Boxing Day but was rested as his troublesome knee struggles to cope with two games in three days.
And his pace and drive was sorely missed as Dave Jones' side ended 2010 in second place in the table after Graham added a late fourth from the penalty spot.
Watford's Will Buckley flashed a shot straight at David Marshall inside the opening 30 seconds before Jordon Mutch also chanced his arm from long range but could not keep the ball down.
Mutch then headed wide in an electric start from the hosts which was capped as they won a seventh-minute penalty.
A clever pass released Buckley into the area and he was tripped by Lee Naylor.
Referee Mark Haywood pointed to the spot but Graham was denied his 13th goal of the season as Marshall made a fine save down to his left.
Watford continued to dominate until Cardiff scored from a classic counter attack in the 16th minute.
Andy Keogh combined with Chris Burke down the left and the Scot crossed for Whittingham who ghosted into space to drill home a low shot.
However, Watford rallied well and were level in the 24th minute.
Buckley was again instrumental as he tormented Naylor before standing up a cross to the far post where Graham was unmarked to slot home.
Naylor was then booked for another foul on the tricky Buckley as a fine first half came to an end.
Burke fired a 25-yard drive across the face of goal at the start of the second period before Watford took the lead in the 57th minute as fog descended on Vicarage Road.
Graham did well to hold the ball up and evade a couple of challenges before finding Sordell just inside the area.
Sordell was able to turn onto his strong left foot and steer a placed finish wide of Marshall and into the far corner.
And it was three seven minutes later when Eustace was left free to nod in Don Cowie's corner.
The thickening fog was making visibility difficult but there was time for the outstanding Buckley to win an 84th-minute penalty when he clashed with Mark Hudson.
Graham had the nerve to step up again and he went down the middle this time to wrap up the win.