The England Under-21 goalkeeper made a string of superb saves to help the Hornets capitalise fully on midfielder Tom Cleverley's fourth-minute goal.
The Manchester United loanee made the most of some poor Argyle marking at a corner to race on to Don Cowie's near-post delivery and clip the ball past home goalkeeper Romain Larrieu by way of a deflection off defender Gary Sawyer.
Argyle took a while to get into their stride but, when they did, they found Loach in impassable form.
He denied Jamie Mackie twice in as many minutes, firstly be clawing a looping header away for a corner and then producing a miraculous point-blank save after the Argyle forward headed powerfully downwards.
Watford could have given themselves breathing space had not Henri Lansbury's shot from the edge of penalty hit a goalpost after beating Larrieu.
However, after the interval it was all Argyle, who did everything bar score thanks to the incredible Loach.
Another great stop thwarted Irish forward Cillian Sheridan from only six yards, and, after Icelandic international centre-back Kari Arnason headed narrowly wide wide, Loach produced another fine save to keep out Gary Sawyer's header.
Karl Duguid spurned the Pilgrims' best chance to equalise by heading against a post from only two yards, while Mackie saw Lloyd Doyley head the ball out from under his crossbar.
Substitute Rory Fallon saw Loach parry a diving header away before Duguid's long-range dipping volley was tipped over by Loach.
Argyle must now try to break their duck for the season at Newcastle on Saturday, when they undertake the longest journey in English football in what looks like Mission: Impossible.