Watford 2 Sheffield Wednesday 1
Goals from Clarke Carlisle and Marlon King's eighth of the season appeared to have wrapped up the Hornets' fifth straight league win inside the opening 25 minutes.
But Adrian Boothroyd's men took their foot off the peddle after the break, allowing Glenn Whelan to net a consolation in injury time.
There was still time for Chris Eagles to snatch a scarcely deserved leveller, but he headed Gabriel Agbonlahor's cross wide of the post.
Had that gone in Watford would have been kicking themselves because they were clearly the better side for much of the game and should have made sure of another win much earlier.
However, Wednesday, who suffered a blow after eight minutes when they lost injured skipper Lee Bullen, did not do themselves any favours by effectively gifting Watford both their goals.
On-loan keeper Nicky Weaver will want to forget his involvement in the second after he inexplicably dropped a routine Anthony McNamee cross when under no pressure at all to present King with an easy tap-in.
Wednesday were also at fault for Watford's opener when the defence were not alive to Ashley Young's quick free-kick, leaving Carlisle with a straight forward far post header.
Watford were in complete control in the opening period and really should have been three or four goals to the good.
The closest they came to adding to their lead was when King found Matthew Spring in the area but his decision to turn before striking his shot gave Weaver enough time to race off his line and deflect the ball over.
After the break it looked like the Hornets would go on and add to their tally, with Spring having a shot blocked and King firing behind in another early move.
But Wednesday increasingly saw more of the ball as the half progressed, although their chances were limited to a Chris Brunt free-kick which Ben Foster pushed behind and the Watford keeper again did well to deny Lee Peacock after he was put through on goal.
But Watford really should have added a third with just 15 minutes remaining when Darius Henderson's flick put Young through, but the 20-year-old tried to round Weaver giving the keeper the chance to block.
Wednesday's consolation also owed much to a keeping error as Foster appeared to be deceived by the flight of Whelan's 30-yard effort and let it squirm into the net.