Yohan Cabaye's second-half penalty proved enough to earn Crystal Palace all three points at Vicarage Road as Watford lost at home for the first time this season.
In a repeat of their 2013 play-off final encounter, a penalty was enough to decide the game in favour of Palace, who move up to sixth in the Barclays Premier League following the 1-0 win.
The game was evenly matched in the first half and both sides saw efforts come off the woodwork before substitute Wilfried Zaha was brought down in the penalty area by Allan Nyom, with Cabaye converting for his second Palace goal.
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After a mundane start it was the visitors who created the first meaningful chance of the day as Brede Hangeland met Cabaye's whipped free-kick only to see Heurelho Gomes save from point-blank range.
Almen Abdi was booked for tripping Yannick Bolasie and, from a free-kick in almost exactly the same position as his previous delivery, Cabaye again produced a tempting cross but Dwight Gayle could not get anything on it.
Despite having plenty of possession, it was not until after the interval that Quique Sanchez Flores' Watford side came close to getting on the scoresheet when, after Abdi had been tripped by Joe Ledley, Jose Jurado stepped up and hit a 25-yard free-kick that came back off the crossbar with Wayne Hennessey beaten.
The Wales number one was forced into action shortly afterwards as Craig Cathcart's accurate long ball found Troy Deeney, whose pass was chested into Abdi by Ighalo - with the full-back's driven shot not far enough away from the Palace stopper.
The visitors alleviated the pressure by hitting back on the counter-attack, with Gomes forced to push a deflected Bakary Sako free-kick behind for a corner before Gayle turned a cross from the former Wolves man against the frame of the goal, Cathcart doing just enough to put the striker off.
Palace boss Pardew introduced Zaha from the bench after hooking him off at half-time in last weekend's defeat at Tottenham and the winger was soon involved, bewildering Nyom with his pace before being tripped by the right-back right on the edge of the Watford box.
Referee Anthony Taylor got the decision to award Palace a penalty correct and Cabaye stepped up to dispatch with aplomb and put the Eagles ahead.
Gayle should have wrapped up the points with a little over ten minutes remaining but he could only poke wide from close-range following Bolasie's knock-down from Zaha's cross.
He came close again after staying onside and breaking clear to latch onto Bolasie's pass but, after wriggling free in the box, he arrowed a shot just wide before being replaced by Fraizer Campbell.
Watford rallied at the death but Ledley's brave block from Jurado's driven attempt summed up their afternoon and, after conceding at home for the first time since their Premier League return, they could not find an equaliser to take a share of the spoils.
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