Rooney powered home a brilliant 20-yard drive after only six minutes, but Watford levelled with Hameur Bouazza’s 26th minute overhead kick.
Cristiano Ronaldo bundled in Rooney’s cross two minutes later as United swiftly restored their lead.
Rooney’s close-range finish wrapped up the win after 66 minutes and substitute Kieran Richardson chipped in a fourth.
The scoreline looks comprehensive, but Watford were well in contention until Rooney’s crucial second and United’s third.
The only low point for United was a first-half injury to Rio Ferdinand, who limped off with a groin problem.
United resisted the temptation to rest their stars after the spectacular Champions League win against Roma – and the move paid dividends as Rooney struck brilliantly after only six minutes.
Alan Smith dummied Michael Carrick’s pass, and Rooney’s first touch was instant before he lashed a rising 20-yard drive past Richard Lee.
United threatened to run away with the semi-final in the early stages, but Watford held on and were rewarded with a stunning equaliser after 26 minutes.
Edwin van der Sar had just received lengthy treatment for a nose injury, and he was still recovering when Tommy Smith headed into the path of Bouazza, who sent an overhead kick into the top corner via a deflection off Gabriel Heinze.
But Watford’s celebrations were short-lived as United regained the lead two minutes later.
Rooney was the creator, racing clear and crossing for Ronaldo to bundle in from six yards.
Watford: Lee, Mariappa (Doyley 88), Carlisle, Stewart, DeMerit, Chambers (Kabba 70), Smith, Mahon, Francis, Bouazza, Priskin (King 78).
Subs Not Used: Loach, Bangura.
Goals: Bouazza 26.
Man Utd: Van der Sar, Evra, Ferdinand (Fletcher 40), Brown, Heinze, Ronaldo (Richardson 77), Scholes, Carrick, Giggs (Solskjaer 83), Smith, Rooney.
Subs Not Used: Kuszczak, Cathcart.
Booked: Rooney, Carrick.
Goals: Rooney 7, Ronaldo 28, Rooney 66, Richardson 82.
United suffered a blow six minutes before half-time, when Ferdinand was forced off with a groin injury and was replaced by Darren Fletcher.
Watford keeper Lee then kept his side in the game with a fine one-handed save from Rooney after a slick exchange with Ryan Giggs.
Fletcher then headed inches wide as United ended the first half in the ascendancy.
Watford, backed by thousands of fans bedecked in yellow, started the second period with real vigour, and Bouazza turned a close-range effort agonisingly wide as the Hornets threatened an equaliser.
But it was effectively all over after 66 minutes, and Rooney was once again United’s main man.
Slack marking by Watford allowed Smith too much space, and he cleverly picked out Rooney for a simple finish.
Watford were in danger of being swamped by United, and Lee needed to be alert again to deny Giggs.
There was one bonus for Watford late on when striker Marlon King, who has been out for virtually the whole season with knee injury, came on as a substitute to a rousing ovation.
Ronaldo was rested to give Richardson a run-out, and he made the most of it by running on to another superb pass from Smith to lift a finish over Lee with eight minutes left.