Corry Evans gave them a foothold in the third minute and Robert Koren netted late on to double the advantage.
Watford bossed the exchanges in between - Danny Graham twice foiled by Brad Guzan and Will Buckley hitting a post - but Malky Mackay's men were left frustrated.
Martin Taylor headed home a consolation to give City the jitters, however they held on to stretch their unbeaten run on the road to 15 matches.
It was a must-win encounter for two teams seven points shy of the play-offs prior to kick off and separated by one place in the table.
Watford had netted in all their home games in 2011 - while City had achieved that same feat in all their away encounters.
And they continued a similar vain, making the perfect start to reinvigorate their promotion push.
Liam Rosenior crossed for Evans to prod past Scott Loach for his second goal in Hull colours.
The goal gave Hull the confidence to probe the Watford backline, but for their possession, Loach was rarely tested.
The hosts struggled to offer anything beyond long balls but Andreas Weimann did have their first effort as his run and shot crept past the post.
The Austrian crashed a volley wide but it was Graham's involvement that brought them closest to a leveller.
The big striker turned at the edge of the area and let fly with a shot that seemed destined for the top corner - until Guzan brilliantly turned it over the bar.
Watford were in firm control but Koren's side-footed shot from close range was hacked off the line in a reminder of City's potency on the counter.
And they threatened moments after the restart as Andy Dawson, in unfamiliar territory, saw his chip nearly find its way into the net.
John Eustace thought he had equalised at the other end, only for the veteran's header to hit team mate Weimann and bounce away to safety.
By now, Watford were bossing the affair. Lee Hodson crossed for Buckley to score but he cannoned a shot off the post from just inside the area.
They kept up their bombardment in the closing stages but as many teams have found this season, Hull's defence was hard to breach.
Substitute Marvin Sordell put Graham behind the defence but Guzan handed them a reprieve with another vital save to beat the shot to safety.
Koren then cashed in to nod home Tom Cairney's centre after they had broken clear, before Taylor gave Watford hope in stoppage time.
It proved no more than a consolation, though, as Hull went to within five points of the play-offs.