Adam Bogdan's early error on his first ever Barclays Premier League start for the club gave Nathan Ake the ideal opportunity to give the Hornets a third-minute lead and things never looked up from there on in.
The in-form Odion Ighalo doubled the advantage when he wrestled off the challenge of Martin Skrtel, who later went off injured, before firing low past Bogdan courtesy of the inside of the far post.
With Liverpool pushing for a response, Ighalo took his tally for the season to 12, heading in from substitute Valon Behrami's delivery across the face of goal to give the home side a commanding victory.
Jürgen Klopp's side were abject throughout and deserved little more, due to defensive errors and a lack of threat in the final third, but how did his players do individually?
Adam Bogdan: Goalkeeping, as they say, is the toughest job on the pitch. Make an error or two and it's impossible to forget, make a few superb saves and they can easily be forgotten. Bogdan, here, had one of the former games. His early error set the tone for Watford and allowed them an early advantage which Liverpool could have done with avoiding. Whilst Ake seemed to kick the ball out of Bogdan's hands, the Hornets preyed upon his weaknesses for the rest of the game and could, and perhaps should, have taken advantage of his poor clearing punch mid-way through the first-half before Skrtel scrambled clear. He improved after the break and seemed to put his nerves behind him, making an excellent save to deny Ighalo and commanding his area better - but the damage had already been done by then. Rating: 4/10.
Nathaniel Clyne: An off-day for the right-back, who had largely been consistent and reliable until recently. The Englishman was awful in possession and conceded the ball too many times, as well as disappointing when going forward. In truth, Clyne wasn't much better when defending despite all of his determination and drive. A day to forget for the 24-year-old, but he wasn't the only one. Rating: 4/10.
Martin Skrtel: Another woeful performance from the Slovakian, who was continually caught out of position and should have done significantly better for Watford's second goal. He allowed himself to be bullied by Ighalo after failing to clear adequately as he again struggled up against a powerful opponent. His disappointing afternoon was summed up by his withdrawal through injury after 41 minutes. Rating: 4/10.
Mamadou Sakho: Thrust back into the side to replace the injured Dejan Lovren, the French central defender's rustiness showed after six weeks out. In fact, the 25-year-old's showing was arguably his worst ever since joining the Reds in January 2013. He was below-par with his passing and played himself into trouble a few too many times, and additionally was unusually poor with some of his clearances. Elsewhere, slips and tumbles saw him gift Watford a number of clear cut chances - none of which they were able to take, fortunately for Sakho. It was an error-strewn performance from the man who has otherwise thrived under Klopp's leadership. Rating: 3/10.
Alberto Moreno: Going into the weekend as the full-back with the most created chances, the Spaniard couldn't demonstrate his ability to bomb forward and cause problems because he was too occupied by Allan Nyom's threat. As such, he rarely featured throughout the first-half - other than when he was given a talking to by the referee for a heavy tackle. He looked better after the break and featured slightly more, but still was unable to offer the influence supporters have become accustomed to seeing from the left-back - besides hitting the side-netting from close-range early into the second period. Rating: 5/10.
Lucas Leiva: The curious case of the Brazilian defensive midfielder continues. Based solely on this performance, you could be forgiven for dismissing him as worthy of the blame and criticism put on him time and time again. The experienced 28-year-old has looked excellent at times under Klopp but distinctly average, or terrible, at others. Vicarage Road saw another one of those dreadful displays as he lacked tempo, composure and energy. He was lacklustre in possession and was forced to take up a centre-back role after Skrtel's substitution. To his credit, he looked a bit better when forced back, but playing in an unfamiliar position inevitably told more than a few times. Should have done better as one of the squad's more senior figures. Rating: 4/10.
Emre Can: Yet again, the young German midfielder turned in a half-promising, half-underwhelming performance. At 21, he can be forgiven for many of his flaws - but should have shown more composure and coolness when in possession. Instead, he gave the ball away too frequently and was not his usual self in driving the team forward with his attacking abilities. One positive was the physical side of his game, showing the steel and grit to be able to rough it up against some of Watford's hard men - but elsewhere disappointed. Gave away the ball too easily in the build-up to the home side's third goal. Rating: 4/10.
Jordan Henderson: Perhaps the only player on the day that came out of the game with any dignity or pride remaining, the captain was better than all of his team-mates in just his second league start back from injury. He played a number of excellent passes, particularly cross-field balls which set the Reds on their way for attacks, and was better than most for his pressing and effort. Also had Liverpool's best effort on goal, forcing a good save from Heurelho Gomes though he could have done better. A major positive that he is nearing full fitness. Rating: 6/10.
Philippe Coutinho: On just his second league game back from injury, the Brazilian offered very little in a poor first-half. Got Liverpool's first shot on target with a trademark attempt which hardly tested Gomes and hardly featured otherwise until after half-time. He looked better after the break and found more areas of space, but was unable to really make anything of them - creating few opportunities and not impressing on or off of the ball. Best moment was finding Origi in space and making a positive run into space, but after he moaned at the striker for not returning the ball - he had largely been offside anyway. A real off-day for the playmaker, who tends to have a few too many games where he goes under the radar when most-needed. Rating: 4/10.
Adam Lallana: Says a lot about the side's performance that Lallana's biggest plus point was that he cared and showed some desire to get back into the game with Liverpool trailing by two goals. Otherwise, the Englishman was yet again frustrating. Running into blind alleys and giving away possession, he was too slow to make decisions - one such was that he should have found Henderson with a pass into space on the right-side on the counter-attack, but instead he took too much time and conceded possession cheaply. Lacked end product and showed few signs of making any real impact for all of his effort. Rating: 5/10.
Roberto Firmino: Virtually anonymous throughout, Firmino was a major figure of disappointment and contributed more offsides than anything else. The Brazilian has split much opinion since his £29 million move from Hoffenheim and did little to help his cause here. Offered very little in the way of impetus and attacking threat before being understandably hooked after 74 minutes. Rating: 4/10.
Divock Origi (Skrtel - 41'): The confidence gained from his hat-trick against Southampton and the late goal against West Brom made him look a much more dangerous proposition after he came off the bench. Indeed, one could have made a case for the Belgian striker to start - but he did his best to grasp his chance when he came on. Showing nice touches and getting himself into good areas, he did his chances of starting more games no harm. Rating: 6/10.
Jordon Ibe (Lallana - 74'): Did not really bring much to the game after coming on in the final quarter of an hour. Flashed a stoppage-time shot wide of the mark and took a corner or two, but could not affect proceedings. Rating: 5/10.
Christian Benteke (Firmino - 74'): Brought on as a double sub with Ibe, the Belgian similarly disappointed. Had a half-chance with a header but was pretty quiet. The 25-year-old vastly needs to improve in the coming games to save what already seems like a fledging Liverpool career. Rating: 5/10.
Jürgen Klopp: The German endured another forgettable afternoon, one which he called his worst moment as the club's manager, despite picking as strong a side he could possibly put out. His strikeforce was similar to the one that so emphatically downed Chelsea and Manchester City earlier in the season but they let him down here, just as his defence and midfield did. He also made sensible substitutions, bringing on Origi in place of Skrtel knowing that the Reds needed to get back in the game, though he could perhaps have brought on Ibe and Benteke earlier. Otherwise, it is attribute a significant portion of the blame for the result to Klopp - who will now surely know he needs to recruit if Liverpool are to progress under him. Rating: 6/10.