Micky Adams' side were first out of the blocks and stormed into a second-minute lead.
Jordan Stewart, up against his former manager, was pulled up for a foul on Willo Flood in the opening minute and it proved to be a costly error.
Coventry skipper Stephen Hughes sent the resulting free-kick into the area, where James Scowcroft flicked the ball on with his head.
Hornets goalkeeper Ben Foster came for the ball, but failed to grab it under pressure from Robert Page, allowing Dele Adebola to direct a shot into the empty net.
There was a brief scare when the floodlights failed for just a couple of seconds, but there was no shortage of power from City when they stretched their lead in the 20th minute.
Marcus Hall, back from injury, was the provider, sending a free-kick into the area. Scowcroft again headed on and Flood drilled a low shot into the far corner past the outstretched arm of Foster.
At the other end Watford were looking lively without really threatening Stephen Bywater in the Coventry goal.
That all changed six minutes after the restart when Ashley Young pulled a goal back with a terrific strike.
He chested a long ball down, turned in an instant and lashed a 25-yard shot past the helpless Bywater.
That set the half up well and it was not long before tempers flared after a two-footed tackle from Page on Anthony McNamee. All but four players got involved in a mass brawl, which resulted in Page and three others receiving yellow cards.
Coventry started to sit too deep and allowed Watford to attack in numbers. The home side, with just one win in 10, almost played the price when Carl Fletcher forced a save out of Bywater with a header.
However, the Sky Blues made certain four minutes from the end when Gary McSheffrey ran through the score.