Reading led for the majority of the contest thanks to a brace from Jem Karacan and an early Adam Le Fondre strike.
But Watford hit back with goals from Marco Davide Faraoni, Troy Deeney and a late goal from Fabbrini to prolong their unbeaten start to the Sky Bet Championship season.
Reading took the lead on eight minutes when Le Fondre fired the home side into the lead in spectacular fashion.
Watford keeper Manuel Almunia came off his line to clear a cross from Jobi McAnuff but could only punch it as far as the edge of the area, where Le Fondre was waiting to hit a brilliant first-time volley through a crowded penalty area and into the top corner.
It was no more than Reading deserved as they dominated the early exchanges with McAnuff and Royston Drenthe controlling much of the play for Nigel Adkins' side.
Watford did play better towards the end of the first half with Ikechi Anya and Iriney combining well in midfield, but without creating any real chances.
The home side should have doubled their lead on 30 minutes when Le Fondre took the ball off Gabriele Angella on the edge of the area only to fire his shot straight at Almunia.
The second goal did come before the break, though, and it was no more than the home side deserved.
Danny Guthrie floated a free-kick to the back post where Alex Pearce headed the ball into the six-yard box, only for Karacan to see his shot saved by Almunia, but the ball rebounded back to the midfielder and he bundled the ball over the line.
Watford then had a brilliant chance to half the deficit but Deeney's header was brilliantly saved by McCarthy early in the second half.
Anya's cross picked out the Watford forward but his header was stopped with a brilliant one-handed save by the Reading keeper when he looked to be diving the wrong way.
That chance seemed to spark Watford into life and they got themselves back into the game in the 66th minute when Faraoni headed home an Almen Abdi cross from close range.
It looked as though the game was over minutes later when Karacan restored the two-goal advantage with a neat finish on 70 minutes.
Le Fondre and Nick Blackman combined well to play in Karacan, who was unmarked on the edge of the six-yard box and finished well.
But Watford were not done as once again they got themselves back into the game - this time from the penalty spot.
Guthrie pulled Fabbrini down in the area and referee Mike Jones had no hesitation in pointing to the spot.
Deeney stepped up to coolly slot the ball past McCarthy and, with stoppage time fast approaching, Fabbrini prodded the ball past McCarthy from close range to rescue a point.