Steven Gerrard scored just after the interval to ensure Liverpool will take a lead into the second leg of their Carling Cup semi-final with Watford.
Gerrard drove home via a deflection from Neil Cox after substitute Milan Baros' run and cross from the left.
The Reds were otherwise disappointing, Florent Sinama Pongolle volleying over and Gerrard quiet in the midfield.
Hameur Bouazza missed two great chances for the Hornets while Bryn Gunnarsson headed straight at keeper Jerzy Dudek.
Liverpool boss Rafael Benitez picked a near full-strength side to face the Hornets and they began strongly, with Paul Jones' goal under immediate pressure.
Gerrard and Luis Garcia blasted wide from long range before the Spaniard hit a volley from 25 yards that forced Jones to make a low diving stop.
Antonio Nunez then raced down the right and got to the byeline, his superb cross falling at the feet of Pongolle only for the Frenchman to volley over from six yards.
Watford were struggling to get a hold on the game in midfield with Gerrard dominating affairs, but a neat passing move 17 minutes in gave the Championship side two chances to take a shock lead.
First, a teasing cross from the right fell to Bouazza who sliced his effort wide and then Paul Devlin crossed for Gunnarsson to head straight at Dudek from seven yards.
The Hornets seemed to gain strength from their near misses and, as the Anfield crowd quietened, Ray Lewington's side began to have a greater influence on proceedings.
Gavin Mahon and Gunnarsson took control of the middle of the park from Gerrard and though Watford did not create any more clear-cut chances in the first half, they were by far the more assured of the two teams.
After the break the Reds seemed to step up a gear and both Neil Mellor and Gerrard tested Jones with low drives, before Mellor was taken off and replaced by the fit-again Baros.
Benitez's change paid immediate dividends as Baros scampered away down the left and after his cross was parried by Jones, Gerrard fired in a goalbound shot which Cox headed into the roof of the net.
Liverpool's main problem was Heidar Helguson's aerial threat and his nod back across goal from a free-kick was brilliantly intercepted by Jamie Carragher with Gunnarsson lurking dangerously.
The Icelander then sent Bouazza through with a fabulous flick, only for the 19-year-old to blaze his left-foot shot high over Dudek's crossbar.
Baros looked lively after a month spent in and out of action with a hamstring problem and he lashed a shot just past the post with Jones scrambling across his line.
With the clock ticking down Watford had a great chance to level the tie, but as Helguson burst through he was denied by a stunning last-ditch tackle from Djimi Traore.
Liverpool: Dudek, Finnan, Carragher, Traore, Riise, Nunez, Gerrard, Hamann (Biscan 71), Luis Garcia, Mellor (Baros 53), Sinama Pongolle (Warnock 78).
Subs Not Used: Potter, Harrison.
Goals: Gerrard 56.
Watford: Jones, Chambers, Cox, Demerit, Darlington, Devlin, Gunnarsson, Ardley (Blizzard 81), Mahon, Bouazza, Helguson.
Subs Not Used: Chamberlain, Dyer, Webber, Doyley.
Ref: S Dunn (Gloucestershire).