The visitors went ahead on 29 minutes when Mohammed Sylla's cross was flicked on by Stephen Hughes and then turned in by the unmarked Mark de Vries.
Early in the second half Watford drew level after Dion Dublin's misjudgement allowed Ashley Young to plant a firm left-footed shot beyond Rob Douglas.
But within 60 seconds Leicester were ahead, Patrick Kisnorbo rising unchallenged to head in a Sylla corner.
Leicester boss Craig Levein:
"During the international break, I watched every minute of every game we had played this season.
"I wanted to know why we were playing well but had won only two games. I decided to change one or two things.
"It wasn't that individuals weren't playing well, but the chemistry wasn't there, so we deserved to win today."
Watford: Foster, Chambers, Mackay, Carlisle, Stewart (Doyley 45), Devlin (Grant 45), Mahon, Spring, McNamee, King, Young.
Subs Not Used: Chamberlain, Fletcher, Agbonlahor.
Goals: Young 49.
Leicester: Douglas, Kisnorbo, Dublin, McCarthy, Stearman, Hughes (Gudjonsson 71), Johansson, de Vries, Sylla, Hammond (Hume 71), Hamill.
Subs Not Used: Tiatto, Henderson, Gerrbrand.
Booked: de Vries, Sylla.
Goals: de Vries 29, Kisnorbo 51.
Ref: U Rennie (S Yorkshire).