Substitute Gray netted the only goal of the game after 65 minutes to condemn Everton to their third straight Premier League defeat.
Silva was back at Vicarage Road for the first time since he was sacked as Hornets manager amid suggestions he had attempted to engineer a move to Everton, and, in the build-up, the typically outspoken Troy Deeney did his best to stoke the fire.
Speaking at a fans' forum, Deeney urged the Watford supporters not to be too harsh on his former manager. Instead, he said: "Leave him alone, let us kick the s*** out of them."
Watford's captain added: "The people at Everton are fantastic. Not the manager."
He may have been more diplomatic in his programme notes, describing the hype surrounding his former manager's return as a "pantomime", but it was Deeney and his Watford team-mates who would enjoy the last laugh.
The predictable chorus of boos as Silva's name was read out by the stadium PA announcer, and ensuing X-rated chants about the Portuguese, dominated the opening exchanges, yet the Toffees enjoyed the best of a scrappy first half.
Kurt Zouma provided home goalkeeper Ben Foster with his first test after 20 minutes, albeit with a tame header that was easily gobbled up by the former England man.
Foster was back in action 10 minutes before the interval when Cenk Tosun, one of three changes made by Silva from the team that lost against Manchester City, swivelled and unleashed a shot on the turn. Foster dived to his left, and averted the danger.
Watford have enjoyed a steady season under Javi Gracia, but the Spaniard would have been disappointed with their first-half showing. Their best chance of the opening period fell to Etienne Capoue. The midfielder held off Zouma, but blasted his half-volley from only a handful of yards out well over Jordan Pickford's crossbar – more in keeping with the Six Nations than the Premier League.
Clearly unsettled by what he had seen, Gracia made a change at the interval, bringing off the ineffective Ken Sema and introducing Gray. Midway through the second half, his substitution had the desired effect.
Craig Cathcart was the surprise provider when his no-look pass found Will Hughes, whose fizzing cross landed at the feet of an unmarked Gray. The former Burnley man could make no mistake from underneath Pickford's crossbar to score his first goal since September.
The delirious Watford fans unleashed their full repertoire of anti-Silva songs. "Silva, what's the score?" they asked before chanting "you're getting sacked in the morning".
It would get even better for the home fans when Silva responded to Watford's goal by hauling off Richarlison, the Brazilian who left Watford to join Silva for £35million last summer.
To their credit, Everton, whose miserable record since the start of December is better only than Huddersfield and Fulham, did not throw in the towel and Lucas Digne came close to equalising when his free-kick hit the bar. But on a miserable afternoon, Zouma was dismissed for a second yellow card in the final moments as Silva, who headed straight for the tunnel on the final whistle, now faces further scrutiny.