Deeney wrong-footed home keeper Shay Given with the penalty after 50 minutes, following Ben Gibson's poor challenge on Fernando Forestieri.
The Hornets made it 10 points from a possible 12 to leapfrog their opponents in the table, but the hosts had Samba Diakite sent off while Boro's Ben Gibson also saw red.
Boro bossed the opening exchanges in terms of possession but they had little to show for their efforts in the opening 20 minutes as Grant Leadbitter screwed a 25-yard shot well wide while Albert Adomah saw his low drive from the edge of the penalty area held by goalkeeper Jonathan Bond.
Watford then started to look brighter going forward as Fernando Forestieri had a shot from outside the 18-yard box deflected behind before Sean Murray missed the target with an effort from the outside of his right boot.
Danny Graham had his first chance to shine against the club for whom he scored 27 goals four seasons ago in the 28th minute when he received an Adomah pass from the left, but the striker opted to try and chip Bond and cleared the crossbar.
Marco Cassetti's booking for a clear body check on Leadbitter in the 37th minute looked like it would be particularly costly when Jonathan Woodgate headed the resultant free-kick past Bond, but the assistant's flag was already raised for offside.
Forestieri missed the target with a couple of other attempts before the interval as a largely low-key opening period ended goalless.
But there was nothing flat about the start to the second half as the first 15 minutes saw a penalty and two red cards.
Watford took the lead from the penalty spot in the 50th minute as Deeney calmly stroked home his 14th goal of the season after Gibson had brought down Forestieri from behind.
Within two minutes though, the Hornets were down to 10 men as Diakite marked his full debut since joining on loan from QPR by being shown a straight red card by referee Oliver Langford for jumping into a challenge on Dean Whitehead two-footed.
That should have swung the momentum in Boro's favour as they went in search of an equaliser, only for Gibson to ensure his side's numerical advantage in terms of players was cancelled out in the 57th minute.
Having already been booked in the first half, the Boro centre-half foolishly tried to prevent Bond from taking a clearance and the official had no hesitation in showing him a second yellow card.
Middlesbrough pressed for the equaliser but they were fortunate not to go 2-0 down when Watford countered with substitute Ikechi Anya's pace.
He got away from Whitehead but, as the Scottish international closed in on Shay Given's goal, he dragged his shot wide of the far post.
The visitors' best chance of equalising came in stoppage time when a cross from the left was headed back into the danger zone by Leadbitter, but Graham could not get enough power on his header to beat Bond.