Deeney was involved throughout and smashed over from a tight angle after rounding Town keeper Alex Smithies early on.
Sean Scannell fired wide from range as the visitors grew in confidence before the break at Vicarage Road.
The home side side worked the ball forward in the closing stages and threatened through Deeney, who hit the bar just before the break.
Deeney finally beat Smithies in stoppage time from the penalty spot, coolly slotting home for his 11th goal of the season to put the Hornets ahead.
Vydra connected with a Marco Cassetti cross to get his first and Watford's second on 55 minutes from close range.
Deeney and Vydra combined with 20 minutes to go to make the game safe, with the latter tucking home for his 16th goal of the season.
Cristian Battocchio added some gloss to the scoreline in added time with a neat finish from inside the six-yard box.
Huddersfield were unable to mount any response in the closing stages as the Hornets climbed back into the playoff places.