It marked three defeats in a week for a dismal United.
Watford boss Walter Mazzarri was forced to make one change to his line-up which beat West Ham last week, with Younes Kaboul out with a hamstring injury and Sebastien Prodl replacing him in defence. Jose Mourinho, meanwhile, handed a first league start for the season to Marcus Rashford and Chris Smalling.
Watford were out of the blocks quickly, with Sebastian Prodl's header flashing across United goalkeeper David de Gea's goal as Troy Deeney was just centimetres away from an opener. On 13 minutes, Watford should've been ahead as Smalling and De Gea found themselves in a tangle, gifting the ball to Odion Ighalo. But the Nigerian fluffed an open chance.
De Gea made up for the error minutes later, however, as he produced a wonder save to deny Deeney. The Watford captain was so convinced he had scored he was wheeling away to celebrate before the Spaniard's intervention.
Deeney then saw a header saved by the United keeper as Watford laid siege on the visitors' goal.
On the half-hour, Paul Pogba produced a moment of magic for United, thumping his drive off the Watford crossbar. But it was only a moment of respite for the visitors as Watford broke from midfield after Anthony Martial was caught in possession.
Darryl Janmaat raced towards the byeline before picking out Etienne Capoue with a cut-back and the midfielder rifled home.
It was a lead Watford thoroughly deserved and they went into the halftime break with Vicarage Road jumping.
United came out firing after halftime, rocking Watford back on their heels. And it was no surprise when they drew level.
After several near misses, Zlatan Ibrahimovic played a clever one-two before setting up Rashford to tap home on 67 minutes.
United now had the ascendency and Heurelho Gomes was forced into saves to deny first Maroune Fellaini and then Ibrahimovic in quick succession.
And the Brazilian's efforts weren't in vain as Watford hit the front on 82 minutes.
Substitute Juan Zuniga had Watford again ahead - less than a minute after coming on. The Colombia international fired into the far corner with his first touch, sweeping in Roberto Pereyra's cut-back from the right flank.
As great a finish it was, United only had themselves to blame as they switched off at the free-kick.
The day went from bad to worse as Fellaini conceded an injury time penalty after a foul on Zuniga. Deeney stepped up to seal a famous 3-1 win for the Hornets.