Match ends, Watford 3, Liverpool 0.
Watford profited from Liverpool's calamitous opening at Vicarage Road to continue their remarkable rise with a fourth consecutive Premier League win.
Adam Bogdan dropped a corner with the very first touch of his league debut, allowing Nathan Ake to stab the home side ahead after just three minutes.
Odion Ighalo doubled the lead, firing in off the post from a tight angle.
And the Nigerian sealed a deserved victory with his 12th of the season, nodding in from Valon Behrami's cross.
The Hornets, promoted from the Championship last term, move to within a point of the Champions League places.
Defeat for Jurgen Klopp's Liverpool, who are now without a win in their last three league games, leaves them ninth - four points behind Quique Flores' side in seventh.
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Were Liverpool really that bad?
With regular goalkeeper Simon Mignolet absent from the squad with a hamstring injury, 28-year-old Bogdan - who had previously only played in the League Cup since his summer arrival - was called in.
Just over two minutes into the match, he bounced Ben Watson's corner at his own feet rather than making what looked like an easy catch. Replays suggested he might have had two hands on the ball when Ake pounced, but nonetheless it was a poor error.
Bogdan said: "I had both hands on the ball but we are talking about a split-second. It's not easy for the referee to see. If I catch the first ball, there is no second one.
"Something went wrong, I have to think about it again. It was a mistake and I will learn from it."
Hungarian Bogdan didn't cover himself in glory when punching a through ball into Lucas' face either though, and his nervousness seemed to spread through the Reds defence.
Martin Skrtel, who came off injured before half-time, was arguably too weak when trying to steer Ighalo away from goal for Watford's second and his fellow centre-back Mamadou Sakho was dangerously ponderous in possession.
Sakho, returning after six weeks out, also fell over under no pressure to allow Ighalo in on goal in the second half, with Bogdan making partial amends via a fine reflex save.
Watford more than Deeney and Ighalo combined
Troy Deeney and Ighalo have created more goalscoring chances for one another than any other pairing this season. They were at it again for Watford's second as a simple Deeney ball over the top put Ighalo through with only Skrtel for company.
The 26-year-old brushed off the Liverpool defender's weak challenge and fired in off the post from a tight angle, before adding his second with a simple header to bring his tally for 2015 to 28 goals - the best return in England's professional leagues.
If Watford were surprised to have gone ahead so early and so comfortably, the rest of their performance showed no sign of it. The Hornets were composed and committed as they outplayed a disappointing Liverpool side.
There was none of the high-intensity, slick interplay that has characterised the best performances of Klopp's time at Anfield so far, and instead it was Watford who claimed a deserved victory.
Man of the match - Odion Ighalo
What the managers said
Liverpool manager Jurgen Klopp: "If you watch the TV, you see Bogdan had the ball under control and both hands were on the ball.
"It should not be allowed but first of all he should not drop the ball. That is the mistake of the referee but the biggest mistake was our reaction.
"It was a deserved win for Watford. Not because of our faults, but more because of the reaction to our faults."
Watford manager Quique Flores: "Of course we want to dream but we want to remain humble. This is our one advantage, because the Premier League is very tough.
"We have a lot of matches and we never underestimate the teams we play. We are completely happy with the performance. It was an amazing victory against an amazing team."
The stats you need to know
- Watford have won four consecutive top-flight games for the first time since April 1987; their joint-longest winning run (also achieved in November 1982, January 1984 and December 1984)
- With 28 points, they have equalled their tally from their last season in the Premier League (2006-07). It is their joint-highest tally in a Premier League campaign
- Liverpool conceded as many goals against Watford in this match as they had in their previous four Premier League meetings combined
- Watford's 3-0 win was the biggest margin of victory they have enjoyed against Liverpool
Watford play Chelsea, Tottenham and Manchester City in their next three fixtures over Christmas and New Year, while Liverpool host leaders Leicester on Boxing Day before away games against Sunderland and West Ham.
- 3BritosBooked at 78mins
- 22AbdiSubstituted forBehramiat 80'minutes
- 7JuradoSubstituted forAnyaat 76'minutes
- 24IghaloSubstituted forGuédiouraat 88'minutes
- 37SkrtelSubstituted forOrigiat 41'minutes
- 20LallanaSubstituted forIbeat 74'minutes
- 11FirminoSubstituted forBentekeat 74'minutes
- 4K Touré
- Mark Clattenburg
- Shots on Target
Second Half ends, Watford 3, Liverpool 0.
Attempt missed. Jordon Ibe (Liverpool) left footed shot from outside the box misses to the right. Assisted by Alberto Moreno.
Corner, Liverpool. Conceded by Ikechi Anya.
Philippe Coutinho (Liverpool) wins a free kick in the defensive half.
Foul by Nyom (Watford).
Offside, Liverpool. Alberto Moreno tries a through ball, but Christian Benteke is caught offside.
Substitution, Watford. Adlène Guédioura replaces Odion Ighalo.
Delay over. They are ready to continue.
Delay in match Miguel Britos (Watford) because of an injury.
Foul by Jordan Henderson (Liverpool).
Valon Behrami (Watford) wins a free kick in the defensive half.
Goal! Watford 3, Liverpool 0. Odion Ighalo (Watford) header from the centre of the box to the centre of the goal. Assisted by Valon Behrami with a cross.
Offside, Liverpool. Philippe Coutinho tries a through ball, but Christian Benteke is caught offside.
Foul by Mamadou Sakho (Liverpool).
Odion Ighalo (Watford) wins a free kick in the attacking half.
Philippe Coutinho (Liverpool) wins a free kick on the left wing.
Foul by Nyom (Watford).
Substitution, Watford. Valon Behrami replaces Almen Abdi.
Attempt missed. Christian Benteke (Liverpool) header from the centre of the box misses to the left. Assisted by Jordan Henderson following a set piece situation.