Roberto Mancini's men comfortably secured their spot in the draw for the fourth round of the FA Cup with a straightforward home win against Gianfranco Zola's Hornets
Goals from Carlos Tevez and Gareth Barry gave the hosts a commanding half-time lead with Fernando Forestieri missing a golden chance for the Hornets.
City bossed the second half but failed to add to their goal tally until deep into injury time when Marcos Lopes bagged a goal on his debut but City's progress was never really under threat from Watford.
Roberto Mancini dropped Mario Balotelli to the bench after their training ground bust-up during the week. Joleon Lescott partnered Vincent Kompany in defence while Tevez came in to partner Edin Dzeko up front. Gianfranco Zola, meanwhile, recalled Matej Vydra and Troy Deeney to his starting line-up.
Watford impressed in the opening stages of the match, Zola's side attacked with freedom and saw two decent shots blocked in the first few minutes but Manchester City soon had the Hornets pegged back into their own half.
The pressure looked to have paid off when Dzeko turned in Kompany's scuffed shot after 20 minutes but the Bosnian's celebrations were cut short by an offside flag.
City were not to be denied for long though as Tevez drove home a free kick five minutes later, the Argentine's blistering shot went straight through Watford's four-man wall leaving Jonathan Bond with little hope of keeping it out.
Costel Pantilimon then had to make a save straight from the restart to keep the hosts ahead as Forestieri beat the offside trap but could not find a finish past the City shot-stopper.
Mancini's side did not threaten much for the rest of the half but managed to double their lead just before the break when Barry ghosted in to the box to nod in James Milner's cross after fine work from David Silva in the 42nd minute.
The second half was very one-sided with Watford rarely enjoying possession in Manchester City's half.
Tevez came close to finding a third for the hosts but missed the ball by inches when he tried to slide in Milner's low ball across the six-yard box.
Balotelli came on for Dzeko with 20 minutes to go, suggesting he has buried the hatchet with manager Mancini, and had a fierce shot well saved by Bond.
Deeney had two decent chances as Zola's side made a late push for a goal but the 24-year-old failed to find the target with either effort.
Lopes capped off a great day for City with a debut goal in the closing stages. The young Portuguese calmly dispatched a side-footed finish from close range to seal a comfortable win.