Middlesbrough's loss was Bournemouth and Norwich City's gain as the thrilling race for the Championship title took another twist on Monday.
Goals from Troy Deeney and Odion Ighalo helped Watford defeat Middlesbrough 2-0 and leapfrog their Championship promotion rivals.
Middlesbrough started Monday top of the table, two points and three places above Watford.
However, Slavisa Jokanovic's men were the better team at Vicarage Road and Deeney scored his 20th league goal of the season in the 37th minute when he controlled Adlene Guedioura's flighted cross and scored through the legs of Dimi Konstantopoulos.
Watford scored a crucial second in the 65th minute when Ighalo showed great control to shift the ball on to his left foot, before rifling his shot into the top right-hand corner from the edge of the box for his 15th league goal in the calendar year.
Bournemouth subsequently went top after turning around a two-goal deficit in a 4-2 victory against Birmingham City at Dean Court.
Goals from Clayton Donaldson and David Cotterill left the home fans stunned, but Steve Cook and Callum Wilson brought the hosts level before the break.
Yann Kermorgant's penalty three minutes into the second half completed the turnaround and Charlie Daniels added further salt into the wounds of the visitors, who finished with 10 men after Paul Robinson was sent off.
Norwich moved into the second automatic promotion spot with a routine 2-0 win over Sheffield Wednesday at Carrow Road - Bradley Johnson scoring a first-half double for the hosts.
Derby County ended a nightmare seven-match winless league run to return to the play-off positions as second-half goals from Chris Martin and Darren Bent saw off Wigan Athletic 2-0.
The defeat left Wigan eight points adrift of safety and the club later parted company with manager Malky Mackay - who failed to win a home league match during his five months in charge.
Ipswich Town lost 2-1 at Huddersfield Town in a dent to their play-off bid, while Brentford produced a late turnaround to draw 2-2 against Nottingham Forest - Jota securing the comeback with a 95th-minute leveller.
Wolves moved in to the top six after beating Leeds United 4-3 in a thrilling late kick-off. Leeds fought back from 3-1 down to level things up, only for David Edwards to head home an 88th-minute winner.
At the bottom end of the table Blackpool's relegation to the Championship was confirmed after Rotherham United were 1-0 winners at home to Brighton and Hove Albion.
Blackpool needed Brighton to avoid defeat and beat Reading on Tuesday - but Matt Derbyshire's first-half strike condemned Blackpool to the drop.
Also on Monday, Bolton Wanderers were comprehensive 3-0 winners at Cardiff City.