Lomas' appointment in June did not go down well with Millwall fans given that he is a former West Ham player and the Northern Irishman has been shown the door after only six months at the helm.
A miserable afternoon for Lomas started when Danny Shittu was sent off against his former club after only 10 minutes and in-form striker Troy Deeney scored the resulting penalty.
Watford then took advantage of their numerical advantage with goals from Fernando Forestieri, Ikechi Anya and a Lewis McGugan spot kick to seal a comfortable win in Giuseppe Sannino's first home game in charge.
It was Millwall's third consecutive defeat and they are down in 20th place, just three points above the relegation zone. Coach Neil Harris has been put in charge of first-team affairs on a temporary basis along with academy director Scott Fitzgerald.
Leicester City took over at the top of the table as they were the only team in the top four to win on Thursday.
David Nugent scored from the penalty spot against Reading in a 1-0 victory that was affected by first-half power failures, with an emergency generator needed to keep the floodlights on.
Burnley dropped down to second place, two points behind the leaders, after Middlesbrough forward Emmanuel Ledesma scored the only goal of the game in a 1-0 triumph at the Riverside Stadium.
QPR have now lost their last two games after they slumped to a 2-0 defeat at Nottingham Forest.
Greg Halford opened the scoring in the first half and Andy Reid sealed the points to move Forest up to fifth.
Huddersfield Town striker Martin Paterson's late goal denied Derby County an eighth win in a row after Craig Bryson's 11th goal of the season put the visitors in front. Chris Martin missed a first-half penalty for fourth-placed Derby, who were held to a 1-1 draw.
Elsewhere, Leeds United were also forced to settle for a 1-1 draw at Blackpool, while Ipswich Town maintained their charge towards the top six with a 3-0 win at strugglers Doncaster Rovers.
Bottom-of-the-table Barnsley were beaten 1-0 at home by Bolton Wanderers, but fellow-strugglers Charlton Athletic secured their first win in six by beating in-form Brighton and Hove Albion 3-2.
Birmingham City had on-loan striker Jesse Lingard sent off but held on for a goalless draw at Wigan Athletic, while Blackburn Rovers and Sheffield Wednesday also finished goalless.
Bournemouth coasted to a 3-0 home win over relegation-threatened Yeovil Town.
