Heiðar was signed by Watford manager Graham Taylor midway through the 1999–2000 season for a club record £1.5m. Brought in to boost the struggling club's striking department, Heiðar had a good debut at home to Liverpool, where he played well. Heiðar scored in his first game. He later picked up the display of the season award for this goal-scoring debut. He scored five more times that season. His goals were not enough to keep Watford up, and the Hertfordshire club were relegated after only one year in the Premier League.