The Hornets battled back from going behind and having Marco Motta sent off to grab a draw and deny the hosts, who lost ground in the race for automatic promotion.
The visitors struck first through Matej Vydra but the game changed when Motta tripped Johnny Russell and Darren Bent equalised from the spot near the end of the first half.
When Tom Ince scored a superb individual goal early in the second half, it looked bleak for 10-man Watford – but Odion Ighalo equalised to move his side to within two points of leaders Middlesbrough.
Watford went into the game knowing a win would take them top while Derby needed victory to stay in touch and it was the home side who created the first opening when Russell got away on the left in the ninth minute, only for his low cross to be scrambled away before Ince could pounce.
The Rams had settled quickly and they twice went close in the 15th minute. First Bent had a shot from 10 yards deflected behind and from the corner the former England striker saw his goalbound shot saved by the legs of Heurelho Gomes.
Watford responded in the best possible way by taking the lead in the 23rd minute with a goal that stemmed from Cyrus Christie losing the ball near the right touchline. Ighalo surged into the area and as Christie tried to make amends, the ball broke off him and into the path of Vydra, who fired low past Lee Grant from eight yards.
Will Hughes fired just wide for Derby, who suffered another blow when midfielder George Thorne – playing his first game after a six-week absence with a thigh injury – had to go off in the 29th minute.
But Derby were level and a man up in the final minute of the first half when Russell was brought down by Motta, who was shown a red card. Bent drove the spot-kick past Gomes into the top right corner.
Watford replaced Vydra at half-time while Christie was substituted by Derby, who almost conceded again when Troy Deeney’s header was pushed away by Grant plunging to his right.
But Derby were ahead in the 57th minute through a goal of quality from Ince, who darted into the area and turned first one way then the other before bending a low shot into the bottom right corner.
Watford now had to chase the game and they were almost caught out when Ince broke away and played in substitute Jesse Lingard on the left – but his shot was blocked by Craig Cathcart.
Ince almost burst clear but Watford were level in the 75th minute when Adlene Guedioura played a clever ball around the corner and Ighalo darted in to fire low past Grant from 12 yards.
Bent had a great chance to put Derby back in front two minutes later but Gomes saved with his legs – and the keeper acrobatically tipped over a Richard Keogh header in the final seconds of stoppage time to earn his side a precious point.