Under pressure boss Lennie Lawrence was unable to lift his side who went down to goals from Danny Webber (two) and Neal Ardley.
The lowest crowd for many years called for Lawrence's head as the game drew to a close.
Right from the opening whistle the Hornets swarmed on to the attack and City keeper Tony Warner needed two grabs to hold a vicious shot from Ardley.
The visitors took the lead when City failed to defend a free-kick. The ball was pushed down the right side by Gavin Mahon to Webber who beat Robert Page before blasting the ball high into the roof of the net.
The City defence was all at sea and a cross from Ardley left Mahon with an open goal but he lifted his shot high over the stand.
Just after the half hour City had a scare when Rhys Weston brought down Webber just inside the area but the match official inexplicably gave the Hornets a free-kick on the edge of the box which Ardley wasted.
Three minutes before the interval a header from Sean Dyche was acrobatically tipped over by Warner as once again City's defending at set pieces left a lot to be desired.
They were once again punished in injury time when Mahon shrugged off a weak tackle from Graham Kavanagh and slipped a pass sideways to Ardley who beat Warner with a low drive.
The Bluebirds made a change for the second half with Peter Thorne replacing the ineffective Andy Campbell.
Throne's arrival and that of Paul Parry in the 67th minute gave City more attacking options but Watford looked the more dangerous on the break.
Watford were easily coping with a poor City display and it was no surprise when Webber finished them off with his second goal five minutes from time.