The visitors flew out the traps with Jonathan Hogg hitting the crossbar before Ikechi Anya scored for the second time in four days with a fine curling finish.
Nathaniel Chalobah then put the game to bed in the 73rd minute, slotting past Stephen Henderson to secure three valuable points in the Hornets' push for promotion.
Ipswich, looking for their first win over the Hornets at Portman Road since 2004, recalled Michael Chopra to their starting line-up after the former Cardiff striker netted the only goal in their 1-0 win over Blackpool on Saturday.
Watford, who boasted the best away record in the division ahead of kick-off, made three changes to the side that thumped Birmingham on Saturday, including the inclusion of Fernando Forestieri up front in place of top scorer Matej Vydra.
Hogg was another of the players recalled to the starting line-up by Gianfranco Zola and the midfielder came agonisingly close to the opening goal after just four minutes but his 25-yard effort rattled the bar.
And two minutes later Troy Deeney, making his 250th club career appearance, had a shot deflected wide as the Hornets continued to show what a danger they are on the break.
But after surviving the early scares the Tractor Boys began to feel their way back into the match and David McGoldrick fired over after linking up with strike partner Chopra, who scored the only goal when the sides last met.
But the visitors took the lead after 18 minutes when a slick move down the left hand side ended with loanee Anya bending the ball into the far corner from inside the box for his fourth of the season and his second in four days.
But 10 minutes later Ipswich were furious after their penalty appeals were turned down when winger Lee Martin looked to have been clipped inside the area.
And Mick McCarthy's men came close to an equaliser on the stroke of half time when Chopra met Richard Stearman's cross with an acrobatic attempt 10 yards out that flew straight at Manuel Almunia.
Ipswich started the second half the stronger and Tommy Smith had the ball in the back of the net in the 66th minute, but the offside flag was raised to spare the blushes of Almunia who had spilled McGoldrick's shot into his path.
McCarthy, knowing his side are far from safe in 18th position, made two attacking substitutes to try and swing the game back in their favour with Aaron Mclean and Frank Nouble entering the fray.
In the 68th minute Forestieri had a great chance to put the game to bed but he smashed the ball wide after drifting past Aaron Cresswell.
But Chalobah did just that five minutes later, the Chelsea loanee finishing a flowing move that he began for his fourth of the season.
Chopra did force Almunia into a smart save late on with a header at the far post but it was Watford's night.