The City striker netted a first-half brace while he also teed up Gabriel Jesus as the visitors took complete control by the break. Watford felt aggrieved that the offside flag did not deny City their first or third goals.
After the break City toyed with the home side for long spells. Nicolas Otamendi headed home a fourth before Aguero secured the match ball and Raheem Sterling rounded things off with a penalty.
Watford were under pressure from early on but, to their credit, they were posing some questions when they got their chances to break.
However, it was uphill from the moment Aguero got his head on Kevin De Bruyne's swinging left-wing free kick on 27 minutes.
Barely four minutes later and Aguero had the easiest of tasks from a yard out after David Silva's low cross evaded Heurelho Gomes at the near post.
Aguero then turned provider, teeing up Jesus inside the box, though the Brazilian did look to be in an offside position before slotting home.
Silva again was the provider on 63 minutes, his cross from the left powerfully headed home by Otamendi.
Aguero notched his treble with nine minutes left, collecting the ball from Kyle Walker and skipping past a couple of challenges before scoring.
Sterling was fouled in the box in the final minute of normal time and the England forward sought permission from Aguero to take the kick himself. After some glances towards boss Pep Guardiola, it was the winger that fired home the spot kick.
For Watford, there was little to be cheerful about, their sub Etienne Capoue really should have scored with a close range header not long after coming on with 20 minutes remaining, but they could have no real complaints about the result.