Adriano Basso saved Darius Henderson's penalty to earn Championship leaders Bristol City a point at Ashton Gate.
The visitors were handed a penalty when Michael McIndoe clipped Tommy Smith's heels, but Henderson's spot-kick was superbly turned away by Basso.
The hosts dominated much of the game with Marvin Elliott twice forcing fine saves from goalkeeper Richard Lee.
John-Joe O'Toole came close to a Watford winner late on, but he failed to head home Danny Shittu's cross.
"We kept our position at the top and other than with Stoke there have been some very good results for us.
"It was a good game, it petered out a little bit when both teams realised that it was important not to get beat and there weren't that many chances."
"He has won us games and he has saved us games so there are no complaints.
"We have won a point and kept a clean sheet so there's a lot to be said for that."
Bristol City: Basso, Orr, Carey, Vasko, McAllister, Brian Wilson (Sproule 89), Johnson (Carle 46), Elliott, McIndoe, Noble (Trundle 77), Adebola. Subs Not Used: Weale, Fontaine.
Booked: Johnson.
Watford: Lee, Mariappa (DeMerit 63), Shittu, Bromby, Stewart, Smith, Eustace, O'Toole, McAnuff, Henderson, John (Williamson 52). Subs Not Used: Poom, Kabba, Ellington.
Booked: Mariappa, Henderson.
Att: 19,026
Ref: Andre Marriner (W Midlands).
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