Peter Whittingham gave Cardiff a lead with a delicate curling shot just after Danny Graham missed a penalty for the hosts following a foul on Will Buckley. But Graham made amends when he levelled as the striker fired in Buckley's ball.
Marvin Sordell's long-range hit put the Hornets ahead before a John Eustace header and a successful Graham penalty gave dominant Watford a deserved win.
The home side, who beat Championship leaders Queens Park Rangers in their previous fixture, followed that impressive result by defeating the side placed second in the division.
It was the Bluebirds' heaviest loss of the season - their fourth in their last six games - and resulted in their manager Dave Jones finding his side seven points adrift of QPR, who won 2-0 at Coventry.
Watford should have enjoyed a bigger victory over a side missing star strike duo Craig Bellamy and Jay Bothroyd. But Hornets boss Malky Mackay saw his men miss an early spot-kick.
Visiting left-back Lee Naylor clipped winger Buckley's legs inside the box and referee Mark Haywood had no hesitation at awarding the blatant penalty.
But Cardiff keeper David Marshall made a stunning save diving to his right to keep out Graham's fierce penalty.
And within ten minutes the Bluebirds were ahead against the run of play as Peter Whittingham guided in his fifth goal of the season.
Chris Burke set up the former England under-21 international and he curled the ball beautifully, with his left foot, around keeper Scott Loach and into the bottom right hand corner.
Graham, though, quickly made amends for his penalty miss as the Watford striker fired in the equaliser.
A misplaced Naylor header inadvertently set-up Buckley and Watford's flying winger crossed for Graham to convert from close-range.
Buckley was giving Naylor a torrid time down Watford's right flank - so much so that Jones saved the full-back from his struggles and replaced him with teenager Adam Matthews.
It was Matthews' Cardiff defensive team-mate Darcy Blake, however, who was lucky not to concede another penalty just before the break when Graham sent Sordell into the box.
The Watford forward was hacked down by Wales international Blake inside the penalty area but referee Haywood waved away the home side's protests.
But Watford did take the lead 11 minutes into the second-half and it was Sordell's first goal in two months that punished the Bluebirds.
His left-footed drive from the edge of the penalty area clipped the inside of Marshall's post before nestling into the back of the net.
And Watford's second goal in six minutes finished off Cardiff.
Captain Eustace's fifth goal of the season - a glancing close-range near-post header from Don Cowie's left-hand corner - secured Mackay's men their first win over Cardiff in six games.
Cardiff provided little in the way of attacking guile or endeavour and Michael Chopra's delicate curling shot from the edge of the area was all that Loach had to do other than picking Whittingham's opener out of the net.
The Bluebirds were not up to much defensively either as Watford's quick and elusive attack tormented - and the hosts rammed home their advantage with a late penalty.
Again it was the outstanding Buckley that won another penalty and when he bundled over by Cardiff captain Mark Hudson.
Graham had the nerve to step up again and he sent his second spot-kick of the afternoon straight down the middle to move Watford to within a point of the play-offs with his fifth goal in three games and 14th of the season.
Report from the BBC.
External Reports
Ffwtbol