Palace's 1-0 win means Brighton will stay up on goal difference if they win their final game at Grimsby and Stoke lose at home to Reading.
Brighton's second victory in eight games was safe from the moment when Dean Blackwell headed them into a 13th minute lead from a Kerry Mayo cross.
Paul Kitson bagged his second goal in five games on 27 minutes, rifling into the roof of the net from point-blank range when Watford failed to deal with Mayo's long throw.
Bobby Zamora, probably making his last home appearance for the club before a move to the Premiership, added his 13th of the season on 72 minutes with a soaring header from a Nathan Jones cross.
Charlie Oatway completed the rout two minutes into stoppage time, turning in a cross from fellow sub Graham Barrett.
Watford played like a team with nothing at stake. Their only chance fell to Jason Norville just before the break, but he was foiled by a smothering save by veteran Dave Beasant.
Brighton boss Steve Coppell, having received a favour from his old club Palace, needs another from his former Palace captain Alan Pardew, now in charge at Reading.
Coppell said: "We are depending in one of the strongest teams in the division, Reading are a solid outfit and I know Alan Pardew is a manager who wants to win every game".
"We are capable of doing it. The sad thing is it is not in our hands."Watford chief Ray Lewington, a close friend of Coppell, was livid with his team's tepid display: "I think my players thought it was a trip to the seaside.
"The lesson from our point of view is that you cannot take liberties."