The reigning champions looked the better side in what was an uninspiring affair in the Midlands and goals from Wilfred N'didi, Riyad Mahrez and a late strike from Marc Albrighton earned victory for the Foxes.
Following their hard-fought 1-0 win over West Bromwich Albion on Saturday afternoon, the hosts started the game with an unchanged side. Elsewhere, Walter Mazzarri made two changes to the side that lost 1-0 to Liverpool - Christian Kabasele and Stefano Okaka replacing Miguel Britos and Troy Deeney.
It was the home side who started the better of the two, as is sometimes expected at the King Power Stadium. A clever Riyad Mahrez free-kick saw Jamie Vardy go clear through on goal. His cross was almost inadvertently turned into his own net by Adrian Mariappa, only for the ball to bounce off the post.
Watford attempted to gain a foothold through the likes of Okaka but Schmeichel provided a formidable barrier with a solid stop to halt the former Anderlecht forward.
Chances fall to the Foxes
A Watford body then almost gifted the hosts the lead again as a poor header from Kabasele left Heurelho Gomes scrambling towards his own net. The ex-Tottenham Hotspur man did well to scoop the ball away from the top corner and spare his defender's blushes.
The breakthrough came with only a few minutes left of the first half. Kabasele failed to clear a Leicester corner and Wilfred N'didi powered the ball into the roof of the net from only a few yards out as it bobbled free. The January signing from Genk wheeled away to celebrate his third goal for his new club.
Riyad Mahrez then went close as his shot from just inside the area took a huge deflection off of Tom Cleverley and smacked the crossbar with Gomes beaten.
Clinical Leicester come alive
The Foxes were presented with a golden opportunity in the second period to extend their lead. Shinji Okazaki played an excellent through-ball to Jamie Vardy. However, taking his shot early, the Englishman failed to get enough purchase on the ball to really test the Watford stopper.
Mahrez though did double the champions' advantage on what was his 100th appearance in the Premier League. A brilliant solo run from the Algerian saw him weave past the Watford defence and he was able to poke the ball past Gomes with his left foot.
Schmeichel then took centre stage as eye-catching stops denied Cleverley and M'baye Niang from range.
The victory was finally confirmed with a Marc Albrighton strike only seconds from the final whistle. On a trademark counter-attack, Jamie Vardy tore through the Watford defence. He then found Albrighton in acres of space on the right-wing who unleashed a cannon of the post which nestled into the net.
As a result, the reigning champions now sit ninth in the Premier League table whilst Watford fall a place to 15th.