João Ferreira's second-half strike cancels out Rotherham's opener but Watford will rue a series of missed chances to win the game.
It is still an unbeaten start to 2023 in the league for Watford, but some more clinical finishing would have seen them extend their winning run to three games.
Shane Ferguson struck in the first half against the run of play to mark the first time The Hornets have conceded this calendar year.
It was cancelled out shortly after half-time by full debutant João Ferreira's fine strike from the edge of the box. A barrage of chances followed for Watford but they were unable to capitalise on any of them.
Slaven Bilić made two changes to the side which beat Blackpool last week, with Ferreira and Matheus Martins both making their full debuts for the club after making cameo appearances off the bench last week.
The visitors travelled down to Hertfordshire off the back of a shock 4-0 thrashing of Blackburn, which came at the end of a six game winless streak.
It was Watford who went closest first, with Mario Gaspar getting on the end of Ismaïla Sarr's cute chipped pass and smashing the ball against the post on the volley.
Bilić was unimpressed with his team's first half performance last week despite the victory, and Watford were looking slow again.
It wasn't long before they were punished for their sluggish start. Rotherham started pressing for the opening goal and Daniel Bachmann was called into action to claw away Daniel Barlaser's powerful half volley from the edge of the area.
The Austrian 'keeper couldn't do anything to keep out Ferguson just minutes later, though. He could only palm debutant Tariqe Fosu's deflected shot to the Northern Irishman who made no mistake in finishing in the top corner.
The goal did indeed seem to liven the hosts up, and Vakoun Bayo nearly equalised almost immediately with an audacious looping volley. Martins' free kick dropped to him on the edge of the area and his first time volley dipped over Viktor Johansson and off the top of the crossbar.
The woodwork was struck for the third time just after the break. Martins unleashed a ferocious shot at goal which was deflected onto the post having been picked out by Gaspar's flick.
Martins was the standout player for the Hornets in the first half but it was the other full debutant who got his team back in the game. Ferreira picked the ball up on the halfway line and drove towards goal unchallenged before picking out the bottom corner from the edge of the area. It was the least that Watford deserved following their relative dominance in the first half and the opening exchanges of the second.
Whilst the hosts were clearly in the ascendancy, and came close to taking the lead through Gaspar's long range drive, Rotherham really should have taken the lead on the counter attack. Substitute Cohen Bramall broke away on the right hand side and picked out Fosu in acres of space in the box, but the Brentford loanee could only tamely strike the ball straight at Bachmann.
Two more chances fell to Gaspar but the Spaniard couldn't convert either. The best chance to win the game for Watford fell to Sarr and substitute Yáser Asprilla. Sarr broke into the box and was denied by Johansson and Asprilla should have done better with the rebound, but lost his balance and tamely shot at the goalkeeper.
It was the closest Watford would get to taking all three points as Rotherham played out the remainder of the game to take a well earned point back to Yorkshire.