The result sent Villa into ninth in the table, leapfrogging Chelsea, who dropped into the bottom half.
Browsing: John McGinn
Ismaila Sarr set up Emmanuel Dennis for his first club goal for Watford’s opener before he found the net himself after an individual run down the right for his side’s second.
International football’s oldest rivals locked horns for the 115th time in Friday’s eagerly-anticipated Group D clash, where the crackling atmosphere belied the restricted attendance of 20.306 at Wembley.
John McGinn’s third goal of the season put Villa ahead in the 17th minute at Selhurst Park when he curled a shot into the bottom corner.
The champions were on the end of a 7-2 humiliation in the reverse fixture at Villa Park in October – one of nine defeats they have suffered this season to leave them playing catch-up in the top-four race.
Late goals from Pierre-Emerick Aubameyang and Calum Chambers late strike helped 10-man Arsenal come from behind to beat Aston Villa at the Emirates Stadium.
Aston Villa returned to the English Premier League after a three-year absence, beating Derby County 2-1 in the English Championship playoff final at Wembley on Monday.