Brendan Rodgers hailed Leicester’s winning mentality as they made it seven wins on the spin to equal a club record from 56 years ago.
Jamie Vardy set the hosts on the way to victory from the spot after VAR backed Craig Pawson’s controversial decision.
It was the striker’s seventh successive game on the scoresheet to set up the latest league win for the second-placed hosts, who are in better form than when they won the title in 2015/16.
James Maddison then struck in stoppage-time to seal the win against managerless Watford , who were hardworking but limited.
Victory equalled Leicester’s club record set in 1963 of seven wins on the spin.
Boss Rodgers, in charge since February, said: “It was a fantastic win for us.
“I came to here because I felt the potential in the team.
“They are performing well and consistently and they have shown they can do that.
“If you are asking them to compete at the top end of the table it is about encouragement and giving them the belief in order to do that.
“We’ve played better this season, however the mentality of the team and the ability to keep going was great.
“Watford were very compact and deep.
“We had a couple of chances early on that we didn’t take.We had to keep our perseverance going.”
On Vardy’s goal, Rodgers said: “I’m not really bothered who scores as long as we win and play well.
“But Jamie is a real talisman, a fantastic striker and in that moment he has that composure to score. He’s very important for us.”
The visitors had Hayden Mullins in temporary charge following the sacking of Quique Sanchez Flores.
He was boosted by the return of captain Troy Deeney to the starting line-up for the first time since August after injury.
But Leicester should have taken the lead in just the second minute when Vardy got away down the left and unselfishly cut the ball back for Ayoze Perez.
Yet Perez was leaning back and blazed a right-foot finish over from near the penalty spot.
It didn’t get any better for Perez in the sixth minute when he had another sight of goal and this time stubbed his finish wide.
The hosts appealed for a penalty in the 38th minute when Adrian Mariappa caught Vardy.
But Pawson booked the former England striker for diving and VAR supported him.
Yet Leicester did have VAR to thank after the break for backing Pawson’s decision after Adam Masina put his hand in Jonny Evans’ face as the defender went down.
Vardy did the rest in the 55th minute as he sparked memories of his record run of netting in 11 straight League games during the club’s 2015/16 title-winning season.
He might also have added another had Masina not redeemed himself with a vital block but Maddison’s late low deflected finish sealed it.
Mullins insisted: “The result at the end is a tough one to take.”
But Rodgers ‘ talented young side have now taken 52 points from 24 games since losing his first game at Watford in March.
They are clearly a club on the rise but Watford are in freefall after picking up just 15 in the same period.