Cesc Fabregas netted a late winner for Chelsea after they had lost a two-goal lead at Stamford Bridge, where John Terry scored what could turn out to be his final goal for the club.
Terry added to the celebratory mood by putting the newly-crowned champions ahead – only for his mistake to gift Watford a goal, scored by Eteinne Capoue, two minutes later.
Goals from Cesar Azpilicueta and Michy Batshuayi then put the Blues 3-1 up and they were seemingly heading for a routine win.
But Daryl Janmaat pulled one back for Watford and Stefano Okaka netted a 74th-minute equaliser soon after coming on as a substitute.
Fabregas, also on as a substitute, had the final word with a first-time shot from the edge of the box with two minutes remaining.
Watford ended an eventful match with 10 men after Sebastian Prodl was sent off for a second bookable offence following a reckless injury-time challenge on Pedro.
Skipper Terry, who will leave the Bridge at the end of the season, was given a starting place in a much-changed Chelsea line-up.
And he delighted the home crowd by opening the scoring in the 21st minute, hooking the ball in from close range after Kurt Zouma had risen to meet Willian’s right-wing corner.
However, a defensive mix-up led to Capoue quickly bringing the Hornets level.
Janmaat crossed from the left and after Nathan Ake’s aerial challenge on Capoue, Terry and Nathaniel Chalobah got in each other’s way and the former England defender’s attempted header clear fell straight to Capoue, who headed past keeper Asmir Begovic.
Chelsea hit back 10 minutes before half-time when Janmaat headed Eden Hazard’s corner as far as Azpilicueta, who thumped the ball into the net from near the edge of the penalty area.
Batshuayi, making his first Premier League start, and having scored the goal at West Brom on Friday which clinched the title, made it 3-1 three minutes into the second half.
Kenedy’s shot was deflected into the path of Nathan Ake, who teed up Batshuayi for a simple tap in.
That appeared to put Chelsea firmly in control, but Janmaat scored a fine individual goal a couple of minutes later, weaving his way into the box from the left-hand side and past Ake before finishing with aplomb.
And when Zouma failed to clear Tom Cleverly’s ball in from the right, Okaka blasted past Begovic.
For all their shortcomings at the back, Chelsea were always the superior attacking force and they regained the lead when Willian found Fabregas, who finished emphatically.