Lee Tomlin converted a penalty 13 minutes in for the hosts, but Troy Deeney's regulation tap-in on 26 minutes ensured it would be a contest at London Road on Saturday.
The Posh rode out a series of slick attacking moves before the break but Watford snatched a deserved lead through a thumping Sean Murray free-kick just minutes after the restart.
It fell to Paul Taylor, though, to clatter home Tomlin's clever pass in the 53rd minute and deny the Hornets all three points.
With both sides' futures already assured in the second tier, the result probably did more to wound Sean Dyche's hopes of guiding Watford to a top-half finish, with Peterborough seemingly content to plan for a second consecutive Championship campaign.
Paul Jones was first to get a feel of the ball as Murray conjured up a snapshot from just inside the box.
Joe Newell and Tomlin drew blocks out of Jonathan Hogg and Martin Taylor respectively before Paul Taylor skewed just wide.
The Posh did not have to wait long as they took the lead from the penalty spot in the 13th minute.
Paul Taylor tumbled in the box under the attentions of the imposing Nyron Nosworthy, with Tomasz Kuszczak getting a glove to the ball as Tomlin swept home the resulting spot-kick.
Nevertheless, Watford responded with vigour, and were back on level terms in the 26th minute.
Murray was afforded the opportunity to pick out Martin Taylor with a free-kick after being impeded by Lee Frecklington.
The tall defender forced a clever reaction save from Jones, the ball spilling to Lloyd Doyley, who made it simple enough for Deeney to convert from six yards.
The Hornets began to pour forward, but Prince Buaben saw a fierce drive defused by Craig Alcock, with Deeney's goalbound strike parried by the under-siege Jones.
Murray then had perhaps the best chance to complete an early turnaround but Frecklington cut out his fizzing curler two minutes into stoppage time.
Peterborough manager Darren Ferguson threw on Grant McCann for Frecklington and handed Kgosi Ntlhe his senior debut at the expense of Tommy Rowe.
But there was no time for the reshuffle to have any effect as Watford made their early promise pay off just two minutes after the restart.
This time, Shaun Brisley fouled Chris Iwelumo just 30 yards from goal, Murray duly obliging with a sweetly-struck free-kick that whistled past Jones and into the bottom corner.
Yet Posh would also make the most of a set-piece to level the tie only five minutes later.
Doyley failed to deal with a McCann corner, shoving the ball into Tomlin's path. The tricky winger teed up Taylor, who confidently rifled across Kuszczak and into the net.
Peterborough might well have capped a remarkable period of pressure with a third goal but Alcock smashed forcefully against the underside of the crossbar.
With 30 minutes remaining Watford were still sniffing and Jones soon rescued the hosts again, tipping over a bullet header from Buaben.
Such a high-energy hour was sure to take its toll on both sets of players and indeed the fizz soon went out of the game.
A series of scrappy exchanges preceded one more push forward from the away team, Matt Whichelow making Jones save with feet before Tyrone Barnett cleared a dangerous Murray corner to safety.