Despite making a positive start, North End - with just one win in seven games - fell behind in the 13th minute when Andreas Weimann, on loan from Aston Villa, got on the end of a cross from Danny Graham to fire past Iain Turner.
The home side levelled, though, in the 28th minute when Barry Nicholson's 30-yard effort eluded Hornets goalkeeper Scott Loach.
Preston moved in front 11 minutes into the second half when Iain Hume notched his 12th goal of the season with a 25-yard free-kick.
Phil Brown's side wrapped up the points with two minutes left when Jamie Proctor claimed his first professional goal from close range after being set up by Keith Treacy.
Preston, bowing out of the Championship after 11 seasons in the second tier, made a bright start and Treacy fired wide from 25 yards in the opening minute.
Hume then shot wide from a Darren Carter cross before Weimann failed to direct his close-range header on target at the other end.
But Weimann, back from a foot problem, made no mistake with his second opportunity after being teed up by strike-partner Graham, scoring his second goal in four games.
Watford defender Martin Taylor, who seemed to have recovered from a foot injury to maintain his record of starting in every league game this season, could only last 22 minutes and was replaced by Tommy Hoban.
Carter drilled a shot wide from 25 yards in the 25th minute as Preston attempted to give their fans something to cheer.
They did just that moments later when Nicholson claimed his fourth goal of the season with a long-range effort and within seconds Treacy saw his left-footed strike hit the post.
Watford, the leading scorers away from home in the division, looked to reclaim the lead but Hoban cleared the crossbar from 30 yards and Lloyd Doyley was also off target while Hume also fired wide from 25 yards for North End as the game swung from end to end.
The visitors nearly restored their advantage just before the break but Troy Deeney's 20-yard strike was comfortably kept out by Turner.
Weimann was denied by Turner at the start of the second half before Treacy was denied by the woodwork again in the 54th minute, this time hitting the crossbar.
But North End did get the ball in the net again two minutes later with Hume converting a free-kick after he was fouled by Adrian Mariappa.
It was not proving to be Treacy's day and he put another chance wide from 12 yards before Hoban should have levelled with 18 minutes left only for his header from a Don Cowie corner to be cleared by Nicholson.
A finger-tip save from Loach prevented Paul Hayes from stretching North End's lead while Watford twice came close to a late leveller.
First substitute Matthew Whichelow headed over from close range before Graham was foiled from six yards by Turner.
Proctor, one for the future at North End, then secured the victory.