In the first half especially Watford ran rings around an out of sorts Wigan side and the only mystery was how they only came to lead 2-1 at half-time.
They took a thoroughly deserved lead after 13 minutes when Bruce Dyer rounded off a superb flowing move with a close-range effort that gave Latics keeper John Filan no chance.
The goal was just reward for the hard work of Dyer and Danny Webber, who were constant thorns in the side of a hard pressed Wigan defence
But out of the blue, Wigan drew level with their first real attack after 24 minutes.
Again it was a fine move - Jason Roberts fed Nicky Eaden and his cross was met powerfully at the far post by Lee McCulloch to level the scores.
Wigan's joy lasted just two minutes until Webber scored a deserved second for the visitors after Dyer flicked the ball on.
Webber was denied by a fine save from Filan five minutes before the break, when Wigan boss Paul Jewell must have given his side a stern talking to.
Two minutes after the restart a Matt Jackson header was cleared off the line by Paul Mayo, but the Latics did not have to wait long for a leveller.
Five minutes later a superb Gary Teale cross found the head of McCulloch, who made no mistake to grab his second of the match.
Both sides had valid claims for penalties - first when Dyer was sent sprawling by Emerson Thome only for the referee to ignore the appeal. Then, at the other end, Mr Kaye compounded an awful display when he denied Wigan a similarly clear spot-kick after McCulloch was brought down by Mayo.
Wigan threw everything at their opponents in the final quarter as Watford tired, but the home side, through over eagerness and careless finishing, couldn't snatch what would have been an undeserved winner.