Having beaten Newcastle United 1-0 in the third round, Quique Sanchez Flores' men struggled to break down their Championship opponents.
But Ighalo capitalised on a defensive mistake from Kelvin Wilson in the 89th minute to ensure Watford's progress into the next stage.
The visitors had been frustrated by Dorus de Vries for much of the encounter at the City Ground, the Forest goalkeeper was called on to keep out an Ikechi Anya effort in the 30th minute before producing an excellent stop to prevent Nordin Amrabat from scoring on his first Watford start.
But he could do nothing to prevent Ighalo from snatching victory with his 10th goal in his last 15 competitive appearances as Forest went crashing out.
Chances proved few and far between in the opening exchanges, with both teams restricted largely to long-range efforts.
However, Forest were grateful to De Vries on the half-hour mark, the Dutchman making a smart save at his near post to deny Anya.
Anya was at fault as Forest spurned a glorious chance to open the scoring on the stroke of half-time.
The Scotland winger was dispossessed by Jamie Ward, who raced through on goal only to dink the ball over Watford's debut goalkeeper Costel Pantilimon and wide.
Forest would have paid the price for Ward's profligacy 10 minutes after the restart if not for more fine goalkeeping from De Vries, who thwarted Amrabat in stunning fashion.
The goalkeeper dived full stretch to tip Amrabat's volley that seemed destined for the top-right corner wide of the goal.
Forest looked the more likely to net a winner as the contest meandered towards its conclusion, with Watford spending much of the final minutes on the back foot in a performance not in keeping with the way they have impressed in the league.
But Pantilimon was never tested by Forest, who were punished for a lack of quality in the final third by the in-form Ighalo.
Nathan Ake combined with Allan Nyom, whose cross was not dealt with by the unfortunate Wilson, allowing Ighalo to sweep the ball into the bottom-left corner and send Watford into the last 16.