The hosts made a positive start with M'baye Niang taking the first shot in anger on six minutes as he cut inside from the right before drawing a comfortable save out of Simon Mignolet with a low effort from 22 yards out.
Walter Mazzarri's men had another chance on the counter in the 16th minute, Troy Deeney linking up well with Tom Cleverley on the left before seeing his shot blocked by Joel Matip.
The Reds' first opportunity arrived on 21 minutes when Adam Lallana showed good footwork on the right to cut inside and pick out Can, who called Heurelho Gomes into a fine save with his left-footed drive from 25 yards out.
The first half finished with the visitors in the ascendancy, Lallana going within inches of breaking the deadlock on 41 minutes with a first-time volley from just outside the area that bounced back off the crossbar, after Gomes had punched a corner into his path.
But the opener wasn't long in coming as Can made the breakthrough with an audacious overhead-kick that flew into the top-left corner of the net from Lucas' clipped cross into the area.
The Merseysiders were buoyed by the marvel strike and they made a good start to the second half, with Divock Origi getting a sniff on goal in the 53rd minute as he cut inside from the left and looked to curl the ball into the far right corner from 22 yards out, but Gomes got a firm hand to it to make a sharp save.
Gomes had to be alert again four minutes later as he blocked Origi's shot from inside the area on the right, after the Belgian latched onto a long ball over the top from Matip.
However, the Hornets weren't just defending and they threatened to equalise on 68 minutes with a 20-yard strike from Etienne Capoue that had to be tipped over by Mignolet.
Daryl Janmaat looked to catch out Mignolet at his near post in the 83rd minute with a curling effort from outside the box on the left, but the Reds keeper managed to get down to his right to make the save.
Gomes pulled off two saves at the death to deny both Matip and Daniel Sturridge from inside the area, the latter particularly impressive after the striker danced his way through the defence before getting off a low strike that was pushed around the left post.
Watford nearly snatched a share of the spoils in stoppage time as Sebastian Prodl fired against the bar from a tight angle on the left after latching onto Stefano Okaka's flicked header from a cross on the right.
Jurgen Klopp's side, in third spot, bolstered their tally to 69 points from 35 games - four points ahead of fifth-placed Manchester United, who have a match in hand. Watford are 13th in the standings with 40 points from 34 fixtures.