Under the guidance of manager Glenn Roeder, the Hornets went into the 94-95 season looking to avoid relegation. They started the season off in poor form, edging towards the relegation zone through out. They were eliminated out of the FA Cup and League Cup early, losing to Mill Wall and West Ham respectively. Watford however, fully concentrated on the league and came close to a play off finish in an extraordinary end to the season as they finished off the campaign in seventh place. The 95-96 season proved to be a total debacle for the club, they were awful through out in the league, ending their campaign in 23rd place, in turn demoting them to the third tier of English football. The Hornets stumbled out of the domestic competitions early on, reaching the third round of both competitions losing to Wimbledon and Blackburn.
Watford’s first season in the third tier of English football was almost sickening, any hopes of an immediate return were dashed early on as they got off to a poor start, they only managed a mid table finish by the end of the campaign, finishing in 13th place. They reached the forth round of the FA cup, however they lost to Manchester City.
Watford installed Graham Taylor as their new manager at the start of the 1997-98 season and their appointment paid dividends. They comfortably topped the second division, finishing off their campaign, tallying up with a staggering 88 points. They suffered early elimination in both the FA Cup and League cup, going out of the FA cup losing to Sheffield outfit against Sheffield Wednesday, they lost out in the league cup to another Sheffield outfit, this time Sheffield United.