An exquisite 40th minute free-kick from Adam Johnson, the winger on loan from Middlesborough, put Watford in front on 40 minutes, but they were pegged back for the second successive week when Wes Hoolahan converted a 70th-minute penalty.
Tommy Smith was presented with two chances to claim Watford's second, but the right-winger headed wide from six yards out and then struck the top of the bar from close range late on.
Injury-hit Blackpool fielded a defensive 3-6-1 formation in what looked a damage-limitation exercise and the move certainly frustrated the Hornets who took a while to find their stride.
After threatening with two Dan Shittu headers and forcing Paul Rachubka to make a fine double save, Watford finally broke the visitors' stubborn resistance on 40 minutes when Johnson curled home a free-kick from 20 yards.
Johnson, the game's most creative player, was withdrawn after 55 minutes along with Watford's leading scorer Darius Henderson as Aidy Boothroyd pushed for the comfort of a two-goal cushion.
But the second goal never arrived and Blackpool claimed a deserved equaliser 20 minutes from time. Shittu fouled Gary Taylor-Fletcher in the box and Hoolahan sent Mart Poom the wrong way from 12 yards.
Jobi McAnuff, Marlon King and Smith all went close late on, but Blackpool held on to end Watford's 100 per cent home record.