United suffered a third defeat in a week as late goals from Juan Zaniga and Troy Deeney gave Walter Mazzari's Hornets a deserved win despite Marcus Rashford's equaliser after Etienne Capoue had put the hosts ahead at half-time.
After successive defeats to in-form sides Manchester City and Feyenoord, United boss Jose Mourinho handed Chris Smalling and Rashford their first league starts of the season in two of five changes for the trip to Hertfordshire.
The hosts started brightly as strike partners Deeney and Odion Ighalo set about hassling the
Ighalo screwed an effort wide and Deeney headed narrowly off target before David De Gea had to be at his brilliant best to keep out the Watford skipper from a Daryl Janmaat cross.
Paul Pogba thumped a superb effort against the bar but, just as United threatened to up the ante, the Hornets stung the visitors with a controversial opener just beyond the half hour.
Anthony Martial had attempted to launch a counter-attack when he went under a strong challenge from Miguel Britos.
Referee Michael Oliver allowed play to continue and Janmaat raced clear down the right to cut the ball back for Capoue to finish well for his fourth of the season.
Zlatan Ibrahimovic fired wide and proved to be the catalyst as United found themselves back level after an incisive move.
The Swede played a neat one-two with Rashford and clipped the ball forward, it struck Valon Behrami on the shoulder and into the path of the teenager who thumped home from close range just past the hour mark.
Heurelho Gomes saved superbly from Ibrahimovic and Marouane Fellaini also went close with a header as United went in search of a winner but, instead, it was the hosts who hit back out of nothing with seven minutes to play.
Roberto Pererya managed to find space to pick out substitute Zuniga- who had only just come on- to sweep the ball past the helpless De Gea to restore Watford's lead.
This time there was to be no way back for United as Watford ran down the clock and added a third through Deeney, from the spot, after Zuniga had been felled by Fellaini.
Having begun his tenure with three consecutive wins, Mourinho now finds himself having to repel the critics after three successive losses, and with a trip to Northampton in the Cup on the agenda, he will be desperate to get back on track.
United Faithful man of the match: Marcus Rashford