Losses against Tottenham, Manchester City and Brighton and Hove Albion had formed part of a run of five defeats in six matches in all competitions, before a 2-0 Europa League win at AC Milan on Thursday lifted spirits.
Aaron Ramsey and Laurent Koscielny were rested ahead of this week's return leg against the Rossoneri but Shkodran Mustafi's eighth-minute opener had Arsenal swiftly on the front foot.
Pierre-Emerick Aubameyang doubled the Gunners’ advantage in the second half, before Troy Deeney – who accused Arsenal lacking "cojones" after scoring a penalty in a 2-1 win for Watford in the reverse fixture in October – saw a spot-kick saved by Petr Cech.
And the victory was sealed for Arsenal in the 77th minute, when Henrikh Mkhitaryan fired in a third from the edge of the box for his first Premier League goal for the Gunners.
Arsenal move to within 10 points of the top four, although the Europa League now appears their most likely route to next season's Champions League.
Despite their impressive win at San Siro on Thursday, thousands of fans opted to stay away, making pockets of red seats visible all around Emirates Stadium.
Those who did turn up were treated to an early goal, with Mustafi heading home from a Mesut Ozil free-kick – Arsenal's 1000th home goal in the Premier League.
Petr Cech did well to block Abdoulaye Doucoure's shot from a Richarlison cutback soon after, before the Brazilian himself forced the goalkeeper into a diving save with a well-taken free-kick, Roberto Pereyra firing over from the rebound.
Ozil, who became the fastest player to reach 50 Premier League assists by setting up Mustafi for the opener, saw a shot blocked by the legs of Orestis Karnezis after 27 minutes, while Richarlison drew another save from Cech with a header before the interval.
The hosts had to wait until just shy of the hour mark to double their advantage, with Mkhitaryan playing a defence-splitting throughball for Aubameyang to round Karnezis and slot home.
Watford's chance to reduce the deficit from the spot came two minutes later, when Ainsley Maitland-Niles clumsily left his body in the path of Pereyra to go tumbling over.
Cech kept out Deeney's effort with a strong hand – a save that will have felt all the sweeter given the striker's disparaging comments earlier in the season.
And the striker was the target of yet more gleeful goading from the Arsenal faithful when Mkhitaryan made sure of the three points with 13 minutes left to play, Karnezis failing to adjust in time to deal with the Armenian's strike.
Key Opta stats:
- Arsene Wenger registered his 700th Arsenal win in his 1,222nd match in charge of the Gunners.
- Shkodran Mustafi's opening goal was Arsenal's 1000th at home in the Premier League, making the Gunners just the second team to reach the landmark after Manchester United (1066).
- Mesut Ozil became the fastest player to reach 50 Premier League assists, doing so in just 141 games and breaking the record held by Eric Cantona (143 games).
- Petr Cech made his first Premier League penalty save since February 2011 for Chelsea against Fulham – it was also the 16th he had faced in all competitions for Arsenal and the first one he had saved for the Gunners.
- Cech registered his 200th Premier League clean sheet, the first goalkeeper to achieve this feat in the competition’s history.
- Four of Mustafi's five Premier League goals have been assisted by Ozil (two from corners, two from free-kicks) – all four of the Ozil assisted goals have been at the Emirates.
- Henrikh Mkhitaryan now has the same record this season in nine appearances for Arsenal in all competitions as he did in 22 games for Manchester United (2 goals, 5 assists).