The visitors started brightly and Brynjar Gunnarsson went close with an overhead kick which was well saved by keeper Andy Lonergan.
Bruce Dyer was next to go close for the Hornets and he was also denied by Lonergan, before North End Dickson Etuhu and Richard Cresswell were denied by Richard Lee before the 20th minute.
Gavin Mahon then had a 20-yard shot straight at Lonergan after a clearance by Eric Skora fell straight to him.
Preston took the lead when Cresswell scored after 34 minutes. A long free-kick from a central position by Claude Davis fell to Cresswell who turned to volley right-footed from seven yards into the bottom right-hand corner of the net for his first goal in 38 league games.
In the 31st minute Fuller had a run and shot from 15 yards which hit the bar and Eddie Lewis bundled the ball over the line but the referee disallowed the goal for a foul and booked Lewis for the foul on Jack Smith.
Watford were level when Paul Devlin slid in to equalise in the first minute of the second half when a Paul Mayo left wing cross fell to him at the far post, and he converted it right-footed from three yards out into the left-hand corner of the net.
David Healey had a header blocked on the line by Neil Cox from a Lewis left-wing cross and Preston were awarded a penalty after 75 minutes when Lewis was fouled by Devlin.
Healey scored the penalty right-footed sending the keeper the wrong way to his left.
Watford won themselves a penalty after 82 minutes when Smith fouled Hameur Bouazza. The penalty by Cox was saved by Lonergan who dived to his right.