The Hornets grabbed an equaliser midway through the second half.
Watford took their biggest away crowd for nine years to the Madejski Stadium and over 3,000 fans spent the afternoon chanting abuse at former manager Brendan Rodgers.
Reading welcomed back skipper Ivar Ingimarsson for his first game since surgery on a knee injury in January.
They also gave a debut to midfielder Jobi McAnuff, signed from Watford just before the transfer deadline and now recovered from a back injury.
Watford were without the injured Heidar Helguson, who is currently on loan from QPR.
The Royals roared into action at the start and came close to scoring three times in the opening three minutes.
First McAnuff beat his man on the left wing and centred for Gylfi Sigurdsson to set up Brian Howard, who hammered the ball just over the bar.
Then Watford keeper Scott Loach was forced to make a super one-handed save from Grzegorz Rasiak's header and almost immediately Sigurdsson hammered a shot against the post.
The goal that Reading had threatened came in the seventh minute. Jem Karacan's through ball was slipped onto Rasiak by Sigurdsson.
The Poland striker controlled the ball, turned sharply and fired it high into the Watford net for his first Reading goal.
Watford's first effort of the game was a drive high over the bar from way out by John Eustace.
Thirteen minutes before the half-time break, Ross Jenkins fizzed a long range effort just wide and three minutes later Danny Graham did exactly the same.
They came closer in the 53rd minute when Eustace shot from point-blank range only to see Adam Federici make an instinctive save by pushing the ball onto the bar before pouncing on to the rebound.
The equaliser came in the 67th minute when Graham spotted Federici starting to come off his line and sent his header over the keeper's head.
Five minutes from end, Watford substitute Nathan Ellington was dismissed for a second yellow card.