The on-loan Everton striker made an instant impact as he netted twice in 13 second-half minutes to fire Leicester to a vital three points.
Bruma equalised and then put City ahead with superb strikes while Marvin Sordell twice fired Watford into surprise leads.
The win gives Leicester an outside chance of reaching the top six and ends any hope of a play-off spot for Malky Mackay's side.
Leicester had a great chance to open the scoring as early as the fifth minute but Angelo Miguel Vitor failed to direct Paul Gallagher's corner on target.
Darius Vassell, recalled by Sven-Goran Eriksson at the expense of Yakubu, hassled the Hornets defence before Patrick van Aanholt smashed a 30-yard strike over the crossbar.
Watford suffered an early blow when Andreas Weimann hobbled off and was replaced by Sordell as the Foxes started to dominate.
Leicester almost broke the deadlock but Scott Loach brilliantly parried away a long range Gallagher free kick.
However, after all the home side's early pressure, it was the Hornets who opened the scoring against the run of play after 27 minutes as substitute Sordell drilled the ball into the top corner from 20 yards.
Watford could have doubled their advantage after 36 minutes but Troy Deeney headed over from 12 yards after good work from Danny Graham.
Leicester equalised just a minute later as Chelsea loanee Bruma spectacularly fired into the bottom corner from 30 yards.
As the game sparked into life, Watford regained their one-goal advantage after 40 minutes when Sordell, who took advantage of poor City defending, drilled in his second goal of the half from 18 yards.
Leicester started the second half much like the first and almost equalised but Ben Mee saw his header crash against the crossbar.
The Foxes were aggrieved not to be awarded a penalty on 52 minutes as Vassell went down in the area before Andy King fired over the bar after a neat cutback from Van Aanholt.
Graham went up the other end and almost put the game to bed but his header was well saved by Chris Weale before Loach denied Vitor as Leicester upped the ante.
Substitute Yakubu, who came on for the injured Ritchie Wellens, took advantage of a horrible error from Loach to level things up at 2-2 after 62 minutes.
The home side looked the more livelier of the two teams and went in front for the first time as Bruma smashed a spectacular 35-yard strike into the top corner after 72 minutes before Yakubu added a fourth a minute later.
The Nigerian lobbed the ball into the net after Loach parried an Andy King's strike.