Two second-half goals by Obafemi Martins made it four wins in five Premiership games for Newcastle and left Watford bottom of the table.
Martins (right) celebrates with Milner
The first half was poor, brightened only by long-range efforts by Watford's Darius Henderson and Jordan Stewart.
Martins nodded Newcastle ahead before Hameur Bouazza levelled when he poked in Henderson's goalbound flick.
Watford were marginally the better side until Adrian Mariappa deflected Damien Duff's cross to Martins to thump home.
Watford began positively but lacked any real punch, so it fell to Newcastle's Kieron Dyer to launch the first meaningful attack of the game with a dipping shot from outside the box, which was blocked by the legs of Richard Lee.
Nicky Butt should have done better with a shot off target as the game started to tilt Newcastle's way, but there was precious little to excite the home fans before the break.
After a long period of inactivity, Shay Given had to be at his best to keep out Henderson's shot on the turn and Stewart's optimistic long-range bouncing lob as Watford had the two best chances of the half.
But it was no surprise that the scores were level at the break, given the overall quality of the match.
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Watford began the second half much brighter, with Alhassan Bangura and Bouazza both having early chances.
But Martins' goal caught Watford off-guard, as the Nigerian got on the end of James Milner's right-wing cross to head home after good build-up work by Butt.
However, the lead was short-lived, as Bouazza poked home Henderson's flick-on from Ashley Young's corner, despite a good shout for obstruction on Given.
Both sides' desire for all three points ensured a nervous finale, with Milner on the right integral to many of Newcastle's threats.
But when the match-winner came, it was down the left, with replacement Duff supplying a deflected cross for Martins to pick his spot and net his sixth Premiership goal of the season.
Newcastle boss Glenn Roeder:
"We had to pull out all the stops to get the victory.
"Watford are difficult to play against and they made it hard for us but we just about deserved the three points.
"But we coped with them well and when we had the chance we played some good stuff. We're delighted to have got our home form back on track."
Watford boss Aidy Boothroyd:
"The performance was good and there were a lot of positives that point to us winning.
"We have improved since we have come into this division and we need to keep doing that.
"When we play as well as we have in this game you expect to win but we didn't.
"I am surrounded by a tough group of players and we have to keep going and keep fighting."
Newcastle: Given, Huntington, Taylor, Ramage, Babayaro, Dyer, Butt (Parker 76), Emre (Duff 68), Milner, Sibierski, Martins. Subs Not Used: Srnicek, Rossi, Pattison.
Goals: Martins 49, 85.
Watford: Lee, Chambers (Mariappa 63), DeMerit, Shittu, Stewart, Smith (Francis 78), Bangura, Mahon, Bouazza, Young, Henderson. Subs Not Used: Chamberlain, Powell, McNamee.
Goals: Bouazza 57.
Ref: M Atkinson (W Yorkshire).