Burnley remain seventh in the table as a result of the win, sitting level on points with North London duo Tottenham Hotspur and Arsenal, while Watford are just one place below but now trail the Clarets by six points.
The home side were without first-choice defenders Ben Mee and Matthew Lowton due to injury, and Watford had an early chance to put a dent in their proud home defensive record when captain Troy Deeney nodded just wide from a corner after only two minutes.
It was a fast start from the visitors, who before this afternoon had scored two or more goals in their last eight Premier League away games, with Richarlison also coming close early on when he poked his finish narrowly over the crossbar.
Burnley soon began to grow into the game, though, and Heurelho Gomes was called into action for the first time after 17 minutes when he made a flying save to keep out Johann Berg Gudmundsson's free kick.
The hosts had an ever better chance to break the deadlock moments later as Chris Wood raced through on goal, but again Gomes was there to make the save as the score remained goalless.
Nick Pope's first save of note arrived with just under 10 minutes remaining of the half when Daryl Janmaat's header was kept out by the Burnley keeper, but the biggest talking point of the first half arrived moments later as the visitors were reduced to 10 men.
It took just five minutes for Burnley to make the most of their numerical advantage, with Scott Arfield stroking the ball into the bottom corner with just one minute remaining of the first half to send Burnley into the break with a narrow lead.
Abdoulaye Doucoure and Tom Cleverley both looked to drag Watford back into the match in the second half with long-range efforts which missed the target, but it was Burnley who had the ball in the back of the net on the hour mark.
Wood's goal was swiftly disallowed for offside, though, and the linesman's flag again cut Burnley's celebrations short a little over 10 minutes later when this time Ashley Barnes was adjudged to have strayed beyond the last defender before beating Gomes.
It was Burnley who continued to look the most likely, though, with Defour firing a free kick narrowly over and Gomes being called into action again to keep out Gudmundsson nine minutes from time.
The Clarets settled for the one-goal victory in the end as Sean Dyche got one over on his former club, ensuring that his high-flying side keep pace with the top six during what has been a remarkable first half of the season.
Watford will also be happy with how things have gone so far this season, but this defeat cuts them six points adrift of the teams directly above them in the table and within striking distance of those below.
Burnley (4-2-3-1): Pope; Bardsley, Long, Tarkowski, Ward; Defour (Westwood, 94'), Cork, Gudmundsson, Hendrick (Barnes, 60'), Arfield; Wood
Watford (4-2-3-1): Gomes; Janmaat, Mariappa, Kabasele, Zeegelaar; Cleverley, Doucoure, Carrillo (Gray, 79'), Pereyra (Holebas, 44'), Richarlison; Deeney body check tags ::