Leicester City 1 Watford 0
The Foxes were the better side in the first 45 minutes but were unable to break the deadlock despite Ritchie De Laet and Michael Keane coming close for the hosts.
Watford, who were without suspended top goal-scorer Troy Deeney, did improve after the interval and could have taken the lead through Matej Vydra, but the visitors were wasteful in front of goal despite having a number of clear cut opportunities to score.
Gianfranco Zola`s side were made to pay in the 82nd minute when David Nugent rose highest to meet Anthony Knockaert`s curling free-kick and head past Manuel Almunia from ten yards.
It was Nugent`s first goal in 17 games but it could not have come at a better time for Leicester City, who now travel to Vicarage Road on Sunday for the second leg of this delicately-balanced play-off tie.
Nigel Pearson will have been pleased with his side`s approach to the game, who having been minutes away from a season-ending draw against Nottingham Forest last weekend now find themselves 90 minutes away from a trip to Wembley.
The hosts started the first-half brightly, testing Watford down the left wing with the pace of Lloyd Dyer and Jeffrey Schlupp, and had their first shot on goal when Michael Keane found space in the penalty area from a corner-kick.
At the other end, Kasper Schmeichel was on hand to make a quick double save from Ikechi Anya and Matej Vydra as Watford broke on the counter-attack, before Marco Cassetti saw his ambitious long-range effort clear the crossbar.
David Nugent then had a glorious opportunity to put Leicester ahead midway through the first-half, but fired wide after Lloyd Dyer had picked the striker out with a good ball back across goal.
Leicester had two fine chances to go in at the break with a goal advantage when Anthony Knockaert fired straight at Almunia from close-range when he might have picked out a teammate in the penalty area, before Michael Keane volleyed wide from twelve yards.
Leicester were still dangerous pushing forward in the second-half, with Jeffrey Schlupp firing wide after a clever one-two with Chris Wood, although Watford were much improved after the break and should have gone ahead when Matej Vydra found himself one-on-one with Kasper Schmeichel but the Udinese loanee`s tame effort did not trouble the Leicester goalkeeper.
Vydra then tested Schmeichel again from eighteen yards, this time forcing a spectacular save from the Danish international, before Alex Geijo headed over Ikechi Anya`s cross to the back post with just over ten minutes remaining.
It looked as though the game would end in a stalemate, but when Harry Kane won a free kick in a dangerous position, Anthony Knockaert swung a dangerous curling ball into the Hornets` penalty area and David Nugent rose highest to head the ball past Manuel Almunia to give Leicester an important 1-0 lead.
It was a deserved goal for Leicester and a long-overdue one for Nugent, who had gone 17 games without finding the net for the Foxes - but this one came just at the right time.
Leicester then grew in confidence for the remainder of the game and might have doubled their advantage when substitute Harry Kane`s looping ball to the back post found Anthony Knockaert, but the Frenchman`s header lacked power and was easily collected by Manuel Almunia.
Watford pressed in stoppage time but Leicester`s backline were equal to the threat and were happy to see out the remaining seconds of the match and wait for the final whistle.
Nigel Pearson`s side will now turn their attention to Sunday`s return leg at Vicarage Road, although they will take with them a narrow advantage over their play-off rivals.