Kieffer Moore's fifth goal in five games ended Watford's unbeaten home run as fans returned to Vicarage Road.
Moore's smart first-half volley as Watford failed to clear a corner gave the Bluebirds a deserved lead as they won for a third match in succession.
The hosts responded in the second half and dominated, but Cardiff held firm.
The victory sees the Bluebirds rise to 11th in the Championship while the hosts slip to seventh, outside the play-offs.
Both sides were playing in front of supporters for the first time in 10 months with the home faithful making themselves heard and clearly revelling in their return to Vicarage Road.