The Canaries will feel hard done by that they didn't take at least a point from the contest after having the majority of the chances, but the Hornets' developing strikeforce of Tamas Priskin and Tommy Smith both scored, either side of Lee Croft's equaliser for the visitors.
Having survived an early scare when Leroy Lita really should have done better with a free header from eight yards, Watford took the lead with their first attack of note in the 16th minute.
The goal originated from a sloppy clearance by Canaries keeper David Marshall that Liam Bridcutt headed firmly back into space in front of him for Priskin to latch onto.
The Hungarian striker calmly advanced before steering a low right-footed drive across Marshall and in off the far post to continue his purple patch with a third goal in as many games.
It took a tremendous block from Jon Otsemobor to prevent Jon Harley from possibly making it two soon after, but the majority of the first-half attacking questions were asked by the visitors.
The closest Norwich came to equalising in the first period came when Otsemobor glanced David Bell's free-kick from the left narrowly wide of the far post.
But Norwich's efforts were deservedly rewarded just after the hour when Croft was allowed to wander in unmarked at the far post to easily head Matty Pattison's cross from the left past Scott Loach.
However, the Canaries' joy was to prove short-lived. Two minutes later Priskin found Smith in the area and, with two defenders in front of him, he managed to work the smallest of openings to curl a low shot through the outstretched arms of Marshall.