Sensational Watford scored four times in the final 12 minutes to record a first-ever win at Goodison Park as Claudio Ranieri celebrated a hat-trick from his former Everton forward Josh King.
Everton twice led through Tom Davies and the returning Richarlison but Watford showed tremendous spirit to level in the first half through King and then turn the game on its head in an amazing finale.
Once Juraj Kucka had headed Watford level, Everton collapsed with King adding two more before substitute Emmanuel Dennis completed the scoring in injury-time.
To make King's treble all the more remarkable, he hadn't scored in his previous 30 league games and had also failed to net in 11 appearances during a spell for Everton in the second half of last season. Those Everton fans who remained until the end booed their side off before applauding The Hornets for their display.
Everton boss Rafa Benitez had to name a patchwork side with Dominic Calvert-Lewin among his injury casualties but they still made the perfect start when Davies, deputising for Abdoulaye Doucoure, scored after only 130 seconds.
Demarai Gray beat William Ekong to reach the byline and David timed his run to perfection to score his first goal since December 2019.
From there, Davies timed his run to perfection to beat two defenders in order to reach the ball first and score his first goal since December 2019.
Ranieri, who celebrated his 70th birthday last week, had started his Watford career with a 5-0 defeat against Liverpool last weekend and he needed goalkeeper Ben Foster to deny Andros Townsend a second Everton goal whilst Anthony Gordon sent a close-range header wide.
Watford survived the onslaught and then levelled with their first serious attack after 15 minutes when King stabbed in at the far post after Adam Masina's cross had been flicked on by Craig Cathcart.
The Hornets celebration were initially cut short when the scorer was judged to have been offside but a lengthy VAR check decided the goal was legitimate.
Everton tried to respond with Townsend having the beating of Juraj Kucka but the final ball was lacking.
Gordon was annoyed a barge from Kucka didn't lead to a penalty. At the other end Ismaila Sarr beat the turf in frustration after he shot over when Everton's defenders had backed off.
Allan was booked for diving in the second half as Everton frustrations grew and they needed Jordan Pickford to keep them level when he stuck out a boot to deny King after Sarr had beaten Lucas Digne down the left.
Though disappointed, King had the grace to tap the gloves of his former Everton team-mate as a mark of respect.
Benitez's first change brought boos from the home fans who wanted to see homegrown talent Gordon on for longer.
But the manager's move was justified when Richarlison headed in Michael Keane's cross with his bleach-blonde crewcut less than three minutes after his introduction after missing five games with a knee injury.
Everton thought they'd edged the game but Ranieri has clearly installed some spirit and character into Watford.
After 78 minutes, the equaliser arrived when Cucho Hernandez's outswinging corner was powerfully headed in by Juraj Kucka.
From then on it was the King show. The 29-year-old slid in brilliantly to convert Dennis' cross from the right then showed great footwork inside the box to add a fourth.
The travelling fans could hardly believe what they were watching and Everton fans deserted in their thousands as Dennis applied the final touch from close range.