The home side had no answer to the Fulham loanee's pace as he set up both of Watford's goals which came within the first 15 minutes.
He laid on the first for Sean Murray who was left with a simple finish from 12 yards out for his second goal of the week.
Then, just seven minutes later, a Shaun Barker mistake allowed Kacaniklic to drive at Derby's defence again and he found Troy Deeney whose deflected effort flew in.
Derby went into the break with a glimmer of hope when Ben Davies' free-kick missed everyone before bouncing in.
But the Rams, who may been distracted by the east Midlands derby with a resurgent Nottingham Forest this Tuesday, could not find a leveller in the second half.
The home side were facing an uphill task after just eight minutes when Murray scored his second goal in the space of four days.
Kacaniklic scampered down the left and cut the ball across for Murray, who netted against West Ham on Wednesday, to side foot home first time from near the penalty spot.
Kacaniklic was enjoying a fruitful spell down the left flank and he cut inside before firing inches wide moments later.
Sean Dyche's side did not have to wait long for the second goal and again the lively Kacaniklic was at the heart of the move as the Hornets doubled their advantage seven minutes after the opener.
Barker let the ball slip under his foot in the middle of the pitch and Kacaniklic pounced, using his pace to break free before squaring for Troy Deeney whose deflected effort flew into the top corner.
The Pride Park faithful were shocked into silence following Watford's electric start, but they came to life when Ben Davies' free-kick halved the deficit in the 31st minute.
Murray's foul on Jason Shackell gave Davies the opportunity to float in a delivery which narrowly evaded the top of Steve Davies' header before bouncing into the far corner.
Derby could have gone into the break on level terms but Steve Davies' tame free-kick trickled through to Watford keeper Tomasz Kuszczak.
The visitors started the second half in a similar manner to how they began the first with Kacaniklic firing a right-foot chance over before Murray lashed into the side-netting.
At the other end, Barker diverted a header into Kuszczak's grateful grasp before a drilled cross from substitute Nathan Tyson was somehow cleared by a last-ditch Adrian Mariappa intervention.
Craig Bryson's volley was destined for the net until Kuszczak pulled off a marvellous stop and the imperious Mariappa's goalline clearance denied James Bailey in stoppage time.