A victory for Ole Gunnar Solskjaer's team would have moved them to within a point of the Champions League spots, but Watford secured just their second league success of the 2019-20 campaign with two second-half goals.
Both Watford and United were unchanged from their respective clashes with Liverpool and Everton last weekend, but Paul Pogba was deemed fit enough for a spot on the away side's bench.
Having trained with the club fully towards the end of last week following an ankle problem, the France international was included in the squad for the clash in the capital.
The sun was shining as Watford got the game underway, but it was still a bitterly cold afternoon in Hertfordshire, and the size of the match for both teams could be felt inside the stadium.
An early cross from Adrian Mariappa threatened to find Gerard Deulofeu inside the United box, but the ball was just too strong for the Spaniard, who was tasked with escaping the attentions of Aaron Wan-Bissaka.
Watford were having opportunities to break forward as the first period developed but too often the final pass went astray, making it comfortable for Harry Maguire and Lindelof in the United defence.
Wan-Bissaka had to block a low cross from Deulofeu in the 17th minute as the Hornets threatened down the right; the resulting corner led to Abdoulaye Doucoure sweeping home from close range, but the referee had already blown his whistle for a foul on the jumping David de Gea.
United were enjoying long spells in possession, but the visitors were finding it difficult to create openings with Marcus Rashford and Lingard both struggling to make their mark.
Troy Deeney had a shot blocked in the 26th minute as Watford threatened on the counter-attack, although it was not a half-hour of action that would live too long in the memory.
Lingard had a golden chance to send the visitors ahead in the 34th minute when he raced onto a pass from Martial, but the Englishman chipped the ball just over Foster's crossbar.
The game's first booking arrived in the 36th minute when Etienne Capoue hauled Lingard to the ground, but the resulting free kick was played short and ultimately came to nothing.
The hosts had their best chance of the half in the 40th minute when Femenia delivered a dangerous cross onto the head of Doucoure, but the midfielder's effort was always moving wide of the post.
The Red Devils had almost 60% of the possession in the first period but did not manage a shot on target as the team's lack of creativity from a central position was once again on display.
Watford made the perfect start to the second period as a half-volley from Ismaila Sarr somehow found its way through the arms of De Gea to break the deadlock in the 50th minute.
There did not appear to be much danger when the ball headed towards goal, but a poor mistake from the United goalkeeper allowed the Hornets to make the breakthrough.
Scott McTominay had an opportunity to answer back shortly after when he met a deep cross inside the Watford box, but the midfielder's header was straight into the arms of Foster.
Almost immediately down the other end, Watford won a penalty when Wan-Bissaka clumsily brought Sarr to the ground, and Deeney stepped forward to send the home side into a two-goal lead with 54 minutes on the clock.
Foster again had to save from McTominay in the 58th minute before the Scotland international fired the rebound over the crossbar during an open period of the clash.
Mason Greenwood came off the United bench just before the hour, but Watford continued to find space in the final third as the hosts broke forward in search of a third which would have surely killed off any hopes of a comeback from Solskjaer's side.
Pogba made his return off the bench in the 64th minute and there did seem to be more intent from the visitors, who saw a Greenwood header miss the target 20 minutes from time at Vicarage Road.
Foster had to save a Rashford free kick in the 72nd minute, while Juan Mata was the away side's third substitute as he took the place of McTominay, which saw Pogba drop into a deeper position.
De Gea again had to save from Femenia 12 minutes from time, though, and the Red Devils were finding it difficult to sustain attacks as they stared at a fifth league defeat of the season.
Foster then had to keep out a curling Pogba effort before Cathcart cleared the rebound, with Watford starting to come under serious pressure for the first time in the contest.
Another mazy run from Martial threatened the Hornets once again, but it just would not fall for the Frenchman before Greenwood lifted one over the crossbar five minutes from time after collecting a brilliant pass from Pogba.
Foster then kept out a low strike from Rashford, with the hosts having to ride their luck late on. In the end, it just was not to be for the 20-time English champions, and the January transfer window cannot come soon enough for the fallen giants, who also saw a late Mata free kick flash wide.
Next up for United is a home game against Newcastle United on Boxing Day, while Watford will look to build on the impressive result when they travel to Sheffield United on the same day.
WATFORD (4-2-3-1): Foster; Mariappa, Kabasele, Cathcart, Femenia; Capoue (Pereyra 77'), Hughes; Sarr (Success 87'), Doucoure (Gray 69'), Deulofeu; Deeney
MANCHESTER UNITED (4-2-3-1): De Gea; Wan-Bissaka, Lindelof, Maguire, Shaw; Fred, McTominay (Mata 72'); James (Greenwood 58'), Lingard (Pogba 64'), Rashford; Martial