Restored to Burnley's line-up in place of the injured Robbie Brady, Arfield proved his worth with a neat finish on the stroke of half-time - moments after Marvin Zeegelaar had seen red for a reckless challenge on Steven Defour.
Marco Silva's side have enjoyed their trips away from Vicarage Road this term, and though the Hornets looked to get on the front foot, Burnley put in a typically rugged display at a snow-swept Turf Moor.
Indeed, despite Watford's renewed vigour at the start of the second half, it was Burnley who looked more likely to extend their lead - Chris Wood seeing a goal correctly disallowed.
Substitute Ashley Barnes thought he had put Burnley two up with 20 minutes remaining, only for Lee Probert, after a lengthy discussion with his assistant, to controversially rule it out for offside.
Fortunately for Burnley, that decision mattered little as Sean Dyche's side - who were beaten at Leicester City last time out - held firm to move six points clear of Watford and level with sixth-placed Arsenal.
Watford started well, both Troy Deeney and Richarlison squandering decent chances to put the visitors ahead.
Burnley would have drawn first blood, however, if not for a fine stop from Heurelho Gomes, who got down sharply to tip Johann Berg Gudmundsson's dipping free-kick wide.
Gomes' counterpart Nick Pope was soon called into action as he reacted brilliantly to keep out Abdoulaye Doucoure's fierce volley at the other end.
The hosts had the better of it as the half wore on and were to be handed a huge boost prior to the interval.
Zeegelaar lunged in high on Defour, and, although the defender seemed to have made some contact with the ball, referee Probert did not hesitate in brandishing a straight red card.
Phil Bardsley's clumsy tug on Richarlison could have resulted in a Watford penalty, but Burnley made their numerical advantage count from the resulting counter-attack - Gudmundsson picking out Arfield who kept his composure to slot home.
44’ GOOOAAAAALLLLLLLLL!!!!!!! pic.twitter.com/f6jS8F1wTE— Burnley FC (@BurnleyOfficial) December 9, 2017
Arfield was in the thick of it again moments later when he prodded the ball into Daryl Janmaat's arm, but Burnley's penalty appeals were unsuccessful.
Janmaat caused Burnley's defence issues with a driving run early in the second half, but Kevin Long - in for Ben Mee - made a vital intervention.
Dyche introduced Barnes on the hour mark, and the former Brighton man was immediately involved.
Arfield lofted in a superb free-kick which Jack Cork nudged into Wood's path for a tap in, but it was deemed that Barnes - who blocked Gomes' path to the ball - had strayed offside.
Barnes looked to have got his reward for an impressive cameo when he thumped in after 70 minutes, only for his celebrations to be cut short by the linesman's flag - despite Arfield's throughball having deflected off a Watford defender.
Watford looked to rally late on, former Burnley man Andre Gray coming on, but it was to no avail as they slumped to a second defeat in three games.
Key Opta stats:
- This was Burnley's 34th Premier League win and the 25th of those to have been won by a single goal margin (74%).
- There have only been nine goals scored in eight Premier League games at Turf Moor this season (six for Burnley, three for their opponents) – fewer than at any other ground.
- Three of the eight red cards to have been given before half-time this season in the Premier League have come against Burnley.
- Watford have now been given seven red cards in the Premier League since the start of 2016-17; no side have more (level with West Ham United).