Captain Sean St Ledger took just 40 seconds to put North End ahead and Leon Clarke doubled the lead before half-time to put manager Phil Brown in position to pick up his first win at the helm.
But Watford substitutes Matt Whichelow and Adam Thompson replied after the break to leave the Lilywhites staring relegation in the face and without a win since December 11.
Watford boss Malky Mackay saw his side produce a truly wretched display for the first hour until his half-time replacements scored but it is now six games without a win in all competitions for the Hornets.
North End kicked off 10 points from safety with Brown choosing to keep Everton loanee Iain Turner in goal ahead of regular first-choice Andy Lonergan.
A poor pitch looked likely to make passing difficult but North End stunned everyone inside the ground by scoring in the first minute.
They won a corner straight from kick-off which Adam Barton played deep to Barry Nicholson on the edge of the area.
He sliced his attempted shot but saw the ball fly straight to an unmarked St Ledger who headed in from five yards.
St Ledger looked stunned and no wonder, it was the first time North End had scored before the 88th minute under Brown.
Keith Treacy almost played in Clarke as the visitors looked to take advantage of a slow start from Watford, who endured a dreadful first half.
The Hornets were struggling to string two passes together and could have been two down but goalkeeper Scott Loach showed strong wrists to turn a powerful shot from Nicholson away to safety.
It came as no surprise when North End doubled their lead in the 37th minute.
Treacy streaked clear down the left and - in a carbon copy of the earlier chance - crossed for Clarke to slide in at the back post and finish from four yards out.
Clarke could have scored again in the final minute of the half but Loach did well to divert his chip wide before Ian Ashbee smashed a volley just over from the corner.
Mackay must have been livid with his side's woeful showing and made the two vital changes at the break as Whichelow and Thompson replaced Lloyd Doyley and Danny Drinkwater.
The hosts finally had a spell of pressure as Preston grew understandably nervous and Whichelow capped their first decent move of the night with a fine goal in the 69th minute.
The youngster exchanged a one-two with Andreas Weimann before beating a challenge on the edge of the area and curling a low shot beyond Turner and into the bottom corner.
North End sub Darel Russell then crashed a 25-yard shot against the post but moments later the strugglers showed just why they are adrift at the bottom by conceding a terrible 79th-minute equaliser.
A free-kick on the halfway line was allowed to bounce inside the area and Thompson appeared unmarked to steer his first career goal past Turner from the corner of the six-yard box.