Nuno Espirito Santo’s side are now on course to finish seventh following their promotion from the Championship last season as they built on their excellent midweek victory over Arsenal by producing another fine display.
After a very tight first 20 minutes, Ruben Neves had the first shot of the game but his ambitious long-range effort was comfortably dealt with by Ben Foster in the Hornets goal.
The visitors continued to be the better team and, just past the half-hour mark, Leander Dendoncker set up Raul Jimenez whose scrambled effort was cleared off the line by Abdoulaye Doucoure.
Watford created an opening in the 37th minute when Will Hughes and Roberto Pereyra released Gerard Deulofeu who failed to beat Rui Patricio and Hughes then headed the resulting corner over the crossbar.
However, Wolves took the lead four minutes later when Diogo Jota's low cross was turned home by Jimenez - the Mexican's 13th Premier League goal of the campaign.
It took Javi Gracia’s team just four minutes after the interval to grab an equaliser though, former Luton Town and Burnley striker Andre Gray smashing home a rebound after Gerard Deulofeu had latched on to Ryan Bennett’s poor back-pass, only to be thwarted by Patricio.
Watford had a penalty appeal ignored midway through the second half when the ball appeared to strike Conor Coady’s hand but Wolves scored the winner with 13 minutes remaining when Jota capitalised on a Foster mistake by nodding Neves’ cross into an empty net.