Super-sub Ross Wallace inspired the Clarets to a thrilling win as they came from behind to register a first victory in five games and get their promotion push back on track.
Brian Laws' men looked to be heading to a potentially damaging defeat when Watford recovered from a Chris Iwelumo goal to stage their own comeback and lead 2-1 early in the second half.
But the introduction of Wallace swung an ultimately thrilling game back Burnley's way as the two teams continued their remarkable scoring spree at Turf Moor.
The previous six meetings here had produced a total of 34 goals and the ratio was all but maintained as Wallace scored the equaliser within minutes of coming off the bench with his second Burnley goal.
The winger then also played his part in the Clarets' winner which captain Graham Alexander converted from the penalty spot on his return to the starting line-up.
The result lifted Burnley back into the play-off zone and more importantly restored some vital momentum to their stuttering campaign.
Laws made three changes to the side that had continued the Clarets' run of draws in mid-week with Alexander, Brian Easton and Iwelumo all returning as Danny Fox and Martin Paterson missed out through injury and Dean Marney dropped down to the bench.
Chris Iwelumo celebrates putting the Clarets ahead
The result was pretty mundane fayre for the opening 20 minutes with only a Michael Duff header from Alexander's corner vaguely threatening the goal.
But the game exploded into life once Iwelumo had headed Burnley in front with his ninth goal of the campaign.
The striker had started the previous two games on the bench but regained his early season eye for goal when he dived to nod in after Jay Rodriguez had superbly headed a Lee Grant free-kick into his flight path.
The goal should have restored some confidence to a Burnley side that looked to be feeling the effects of their winless run but almost immediately they let Watford back into the game.
Don Cowie was given a sighter with a one-on-one which he badly missed after being released by captain John Eustance after 29 minutes.
But to the midfielder's credit he came back for more within 60 seconds as Clarke Carlisle and Wade Elliott got in a terrible mess to allow Cowie another run at goal which this time ended with a calm finish beyond Lee Grant to leave the Clarets with it all to do again.
Ross Wallace makes it 2-2....
Opportunities were hard to come by but in the final minute of the first half Tyrone Mears went close to restoring the Clarets' advantage.
A foul on Chris Eagles by Martin Taylor earned the former Blackburn defender a booking and from 25 yards Mears curled in a free-kick which had Scott Loach diving to save at full stretch.
The Clarets then started the second half positively but the spell of momentum was all too brief and Watford grabbed the initiative to go 2-1 up after 56 minutes.
Jordon Mutch's corner was delivered perfectly for the towering figure of Taylor, who was given too much space to head powerfully home.
The goal was a hammer blow for the home side and with an air of unease around Turf Moor, Watford could have put the game to bed as Stephen McGinn missed two decent chances.
....and gets Turf Moor on its feet
Laws responded by switching to 4-4-2 and then sending on both Ross Wallace and Stephen Thompson to try and rescue the situation.
And within four minutes it had worked thanks to Wallace. With Eagles and Jack Cork combining for Eagles to cross from the right flank, Wallace arrived from the other to crash a side-foot volley into the roof of the net.
Wallace's introduction gave the Clarets an extra dimension as he peppered the Watford penalty area with a string of sublime crosses and when Rodriguez was flattened by Taylor as he rose to meet one, referee Chris Sarginson pointed to the spot.
Watford protested at length but Alexander typically kept his cool to drive home his third penalty of the season via the underside of the bar to complete a dramatic and timely turn-around.
Before Graham Alexander celebrates the winner
Even still there remained work to be done, though, and Clarets' keeper Lee Grant had to make an excellent save from Mutch and a follow-up from substitute Marvin Sordell to secure the points after seven minutes of added time.
Burnley: Grant, Mears, Easton, Carlisle, Duff, Cork, Alexander, Elliott (Wallace 66), Eagles (Marney 90), Iwelumo (Thompson 66), Rodriguez. Subs: Edgar, Bikey, Cort, Jensen.
Watford: Loach, Doyley, A Taylor, M Taylor, Mariappa, Cowie, Eustace, Deeney, McGinn (Sordell 82), Graham (Buckley 90), Mutch. Subs: Hodson, Walker, Gilmartin, Bryan, Bennett.
Referee: Chris Sarginson.
Booked: Burnley: Cork 56, Eagles 85
Watford: M Taylor 45, Graham 46, Eustace 86