David Connolly scored with a low shot after Darren Kenton's pass and Stephen Hughes equalised from 18 yards.
Leicester almost scored a winner but Richard Lee parried from Connolly and Keith Gillespie missed the rebound.
Jay De Merit had put Watford ahead, heading home a free-kick, before Danny Webber scored a penalty after Nikos Dabizas fouled Heidar Helguson.
Leicester manager Craig Levein:
"I thought we showed our character. We were as good in the second half as we were bad in the first-half. I don't know why but we weren't at it and we seemed to lack energy.
"Naturally we were concerned about tired legs after playing on Sunday and we
brought some fresh players on and we stepped up our work and I thought we did extremely well.
"It was good to see David Connolly get back on the scoresheet and he looked
more like his old self.
"In fact, we looked like our old selves in the second half and if we had gone
on to win the game I don't think it would have been unfair."
Watford: Lee, Chambers (McNamee 83), Cox, DeMerit, Smith, Doyley, Mahon, Jackson, Ardley, Webber (Bouazza 86), Helguson.
Subs Not Used: Chamberlain, Dyer, Blizzard.
Booked: DeMerit, Mahon, Smith.
Goals: DeMerit 40, Webber 44 pen.
Leicester: Walker, Kenton, Hughes, Dabizas, Maybury (de Vries 89), Gudjonsson (Tiatto 45), Williams, McCarthy, Dublin, Moore (Gillespie 64), Connolly.
Subs Not Used: Gemmill, Hirschfeld.
Booked: Gudjonsson, Maybury, Tiatto.
Goals: Connolly 56, Hughes 72.
Ref: I Williamson (Berkshire).