Defender James Collins saw red late on to compound the misery as the Hammers slipped to fifth in the table.
Here's our player ratings for West Ham from the game.
Adrian – 5
Didn't look his usual imposing, confident self and his distribution - one of the strongest parts to his game - was well off. He nearly cost a goal with a poor kick straight to a Watford attacker at one stage. He could do very little about either goal, Carroll and Tomkins making horrendous errors to gift wrap it for the hosts.
Jenkinson – 6
Only in the second half did Jenkinson start getting forward and attacking the Watford left-back and with some success too. Why it took him nearly an hour to get into the game is a mystery because when he did he had the beating of Ake everytime. Got a few good crosses in which nearly led to goals but it was all too little too late. Was also caught out of position a few times as Ighalo and Deeney ran Tomkins and Collins ragged.
Tomkins – 4
Awful from Tomkins, one of his worst ever games for West Ham. Looked shaky from the start which is so unusual considering the form he has been in. I would question whether he or Collins had done their homework on Deeney and Ighalo who turned them inside out all game long. Made an awful mistake for the second goal. Cannot complain if, as is expected, he is replaced by fit-again Angelo Ogbonna next time out after this display.
Collins – 4
Like Tomkins the Welsh international has been in fantastic form of late. But it all fell apart and he too can be accused of not having done his homework on Deeney and Ighalo. He was run ragged and was second to everything. His frustration got the better of him late on as he was sent off for going through the back of his chief tormentor.
Cresswell – 6
Cresswell did ok and rarely gave the ball away but like Jenkinson did not pose hardly any attacking threat which is so crucial to the way West Ham play. Neat and tidy and Watford did not get in too many times down his side but none of the defence came out of the game with much credit.
Lanzini – 5
One of the stars of West Ham's season so far but he failed to get into the game and was subbed, rather harshly it has to be said, at half-time. Has been so key to West Ham's brilliant away form so far this season and I think given the way the second half panned out Bilic, in hindsight, will be thinking he should have kept him on.
Kouyate – 6
Got on the ball and kept things ticking over in midfield but the beast was not at his brilliant best. The surging runs through midfield were missing and he kept looking to play the ball sideways or backwards rather than going for the jugular like he usually does. He was probably West Ham's best player but didn't stamp his authority on the match as much as they needed him too and instead his opposite number Capoue bossed it.
Noble – 4
Once again the skipper put in a very poor performance. Initially after being handed the captain's armband after Kevin Nolan's departure Noble's performances spiked. But he has been very poor of late, even when the Hammers were in the middle of their seven-game unbeaten run. He was out of sorts again at Watford and is under genuine pressure now Alex Song is back in first team contention. Another who can have no complaints if he is left on the bench in near future. Must improve.
Moses – 5
Another game where the pacy winger showed why Chelsea were happy to loan him out yet again. Moses was brilliant in his last game at Crystal Palace but could not play against the Blues last time out. He is so inconsistent, though, and although he was West Ham's main threat against Watford in the first half, Moses kept switching off and often switched off not bothering to chase his man back and help the defence when he lost the ball. Mauro Zarate woud have felt hard done by losing his place to Moses after scoring and playing well against Chelsea last weekend. He would have felt even more frustrated watching the way his replacement performed. Moses was no worse than anyone else but the expectations are high and he failed to deliver. Subbed at half-time.
Payet – 6
Nowhere near his influential best but anything good West Ham did - and there were a couple of moments - came through him. He went close in the first half and was the only player with any vision in claret and blue. Put over a superb ball for Carroll but the striker fluffed it. He needs to be dominating games like this, though, if West Ham are to really achieve something special this season.
Carroll – 4
Really poor on his first start for eight months as a result of Diafra Sakho's injury. Didn't get a great deal of service but also failed to do anything with it when he did. Tried hard as he always does but fluffed two excellent chances second half which would have got his side back in the game. Made a ridiculous mistake to gift Watford the first goal when he twice failed to clear a ball in the box and then attempted a Cruyff turn on the edge of his own six-yard box and was robbed of the ball which was then played to Ighalo for a tap-in on the line. Proved on this showing that he either has to play as part of a two so he has more support because he doesn't have the movement or pace to emulate Sakho's crucial role, or is just a Plan B to come off the bench like he has to great effect in recent weeks.
Valencia – 7
Looked sharp, hungry and full of running after replacing Lanzini and his pace troubled the hosts. Got the Hammers looking forwards again and should have scored, unluckily hitting the foot of the post which could have turned the game on its head. Could start next week after impressing as sub on his return to fitness.
Zarate – 6
Put more effort in than Moses and showed some nice touches. Would have felt hard done by losing his place after scoring against Chelsea last week but held on to the ball too long and often lost it. Right wing is not his natural position in fairness either.
Jelavic – 6
Came on for Noble with just over 10 minutes left and put himself about. Perhaps this would have been the game to give a hungry Jelavic a surprise start alongside Carroll? Finds himself way down the pecking order as fourth or fifth choice striker but has been handed a two-year deal and will get his chance eventually especially if the team puts in many more performances like this.
Subs not used: Randolph, O'Brien, Ogbonna, Antonio.