The Gunners conceded just before the half-time whistle to Ismael Kone, before Brazilian winger Marquinhos restored parity for Mikel Arteta's side not long into the second half.
Despite being without a host of international players, Arsenal named an experienced starting lineup comprising the likes of Gabriel Jesus, Gabriel Magalhaes, Ben White and Leandro Trossard.
It was one of Arteta's young guns was culpable for Watford's opener, as Myles Lewis-Skelly was robbed of the ball in a dangerous area, and Arthur Okonkwo saved from Matheus Martins before Kone followed up on the rebound.
Both sides made a plethora of changes at the break, and 10 minutes into the second half, Amario Cozier-Duberry drove at the Watford defence and tried to pick out the bottom corner, but his shot was parried by Ben Hamer.
However, Hamer could only deflect the ball into the path of the arriving Marquinhos, who reacted quickly to slot home the hosts' equaliser with a crisp first-time strike on his left foot.
Arsenal now have five days to recuperate before they meet German second-tier side Nurnberg, after which Arteta takes his team to the United States to face the MLS All Stars (July 19), Manchester United (July 22) and Barcelona (July 26).
The Gunners will round off their pre-season preparations with the Emirates Cup against Monaco on August 2 - four days before the Community Shield versus Manchester City - and they begin the new Premier League season at home to Nottingham Forest on August 12.