Steve Coppell eventually ran out a comfortable winner in the battle against his good friend Ray Lewington, whose side have now not won in ten league games.
Lewington handed debuts to loan signings Paul Jones and Johnnie Jackson as the Hornets aimed to end their dismal run, but Jones' first touch in a Watford shirt was to pick the ball out of the back of his net as Reading went ahead inside three minutes.
James Chambers tripped Lloyd Owusu wide on Reading's left flank and free-kick specialist Nicky Shorey swung in a cross for central defender Ibrahima Sonko to head home his first goal for the club.
The Wales international keeper had little chance with the goal and did well to prevent Reading from taking a two-goal lead as he dived to cut out a Glen Little cross with Owusu waiting to pounce.
Jackson, though, was Watford's most likely source of reply, bending a well-struck free-kick just wide on 16 minutes and then seeing a sweet volley well blocked by Andy Hughes.
Reading keeper Marcus Hahnemann also saved bravely at the feet of the on-loan Spurs midfielder, but Little was an even bigger threat at the other end and was desperately unlucky not register his first goal of the season.
First, he saw a curling shot fly just wide after twisting and turning past the Watford defence, then in the second half Jones denied him with a fine one-handed save after Little had superbly volleyed Owusu's cross.
Reading were increasingly dominant after the break and should have been 2-0 up when Little teed up Owusu in front of goal, only for the big striker to somehow slice wide of an open goal.
But Coppell had no need to sweat over that miss as captain Steve Sidwell struck a second within three minutes.
Nicky Forster, making his first start in 13 games following a stomach injury, sent over a defence-splitting low cross and Sidwell timed his run to perfection to slot past a stranded Jones.
Owusu ultimately had his moment too, completing the scoring two minutes from time when his header from a Paul Brooker cross beat Jones at his near post.
And Reading should have had the chance to add a fourth in injury-time when Neil Cox hauled Forster down in the box, only for referee Phil Crossley to show some Christmas spirit to Watford by waving play on.