Tommy Smith again underlined his value to Watford with a goal and an assist to put the hosts on course for another victory following their impressive 4-2 success at Nottingham Forest in midweek.
Smith, 29, who has been the subject of intense speculation linking him with moves to Reading, Sheffield United and Portsmouth, fired the Hornets ahead in the 24th minute.
Blackpool drew level in the 56th minute when defender Alex Baptiste fired home but more good work by Smith saw him create a second goal for on-loan Manchester United youngster Tom Cleverley.
Yet Holloway's men were not to be denied and Gary Taylor-Fletcher buried a low cross from Charlie Adam to hand his side a share of the spoils in the 72nd minute.
Watford began in lively fashion and went close in the 15th minute when Danny Graham fired a fierce shot goalwards from 12 yards.
Blackpool goalkeeper Paul Rachubka was equal to the task and made a fine save to tip the ball around the post.
The visitors signalled their threat two minutes later when former Rangers midfielder Adam hit a left-footed shot over the crossbar from 30 yards.
But Watford continued to probe and Smith engineered the space to drill a right-footed shot wide in the 18th minute.
Six minutes later, he put his side ahead when he collected Graham's pass and slotted a right-footed shot into the net from 12 yards.
Adam then tried his luck from distance again in the 27th minute but his effort was bravely blocked by Jay DeMerit.
Blackpool sought a riposte in the 29th minute when midfielder David Vaughan fired just over from 18 yards.
Adam then shot over from 25 yards but the Hornets had opportunities to double their advantage before the break.
Don Cowie narrowly failed to hit the target from 12 yards and then Ross Jenkins had an effort blocked by Blackpool defender Keith Southern.
Cowie hit the bar with a 20-yard strike in the 53rd minute but three minutes later they were level.
An inswinging corner from Neal Eardley was flicked on by Jason Euell and, although Hornets goalkeeper Scott Loach parried the effort, Baptiste was on hand to sweep the ball home from six yards.
Parity lasted only for seven minutes as Smith tore down the left flank and conjured a fine cross which Cleverley arrived to dispatch with a low right-footed shot.
However, Blackpool showed commendable spirit to fashion a second equaliser with 18 minutes remaining.
Adam's desire allowed him to reach the right-hand byline and drill a low cross across the face of goal and Taylor-Fletcher arrived to rifle the ball home.
Neither side could find a winner in a tense finale which saw Vaughan go close for the visitors.