Palace regained the lead just past the hour, however, as Connor Wickham's clever header proved enough to send Alan Pardew's side into the FA Cup final, where they will meet Louis van Gaal's Man United.
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Palace boss Pardew kept faith with his 4-3-3 formation at Wembley, with Bolasie, Wilfried Zaha and Wickham all starting in what was an attacking Eagles XI.
Palace made the brighter start to proceedings and they were rewarded in the sixth minute when Damien Delaney's near-post header found its way to Bolasie, who kept his eye on the ball and nodded home to send the Eagles ahead. Deeney went up with Bolasie inside the box, but it was the attacker that produced the telling touch.
Deeney and Ighalo managed their first link-up in the 16th minute and it led to the former releasing a long-range strike, but it was never troubling Wayne Hennessey, who was the quieter of the two goalkeepers in the early exchanges.
Palace continued to threaten from set pieces, however, and Pantilimon needed to get strong hands on a strike from Yohan Cabaye, before the Watford stopper kept out a free kick from Palace's French international.
Both teams had plenty of possession in forward areas as the first period drew to a close, but both were guilty of conceding the ball too easily and a fairly uneventful first 45 minutes ended with Bolasie's header separating the two sides.
Deeney had a half-chance for Watford early in the second period when he met a deep cross from Nyom, but the skipper's header was always moving over the crossbar during a bright spell for the Hornets.
Moments later, Bolasie's pace took him into the Watford box and the 26-year-old looked to drill a low effort under Pantilimon, but the Romanian made a smart save to keep his side in the match.
Watford levelled the scores in the 55th minute, however, when Deeney rose above Scott Dann inside the Palace box to head a Jose Manuel Jurado corner past Hennessey from close range and send the Hornets fans into jubilation.
Deeney remained Watford's biggest threat and again met a deep cross from Jurado in the 76th minute, but Hennessey was on hand to collect, before Cabaye fired straight at Pantilimon down the other end.
Bolasie was sacrificed for Palace as James McArthur entered to tighten up the midfield, but Pardew's side still had electric pace in Zaha and the Englishman should have done better after driving into the Watford box 10 minutes from time. Eventually Wickham took over and released a strike, but Craig Cathcart made the block.
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Ighalo had a rare chance for Watford late on after meeting a flick from Deeney, but the striker fired over the crossbar from close range, before Jurado fired into the arms of Hennessey from the edge of the box.
Zaha's pace proved key for Palace in the latter stages as the former Man United attacker continued to run down the clock and Watford, who came close late on through Adlene Guedioura, just could not find a second as Palace marched on to their first FA Cup final since 1990.