Centre-back Lynch scored Town’s third goal with a superb overhead kick seven minutes from time to finally see off play-off hopefuls Watford.
After a goalless first half Huddersfield took control of the Sky Bet Championship encounter, going ahead through Nahki Wells in the 52nd minute.
The striker slotted home from close range from Jacob Butterfield’s cross but Watford levelled in the 66th minute after substitute Odion Ighalo, only on the field for three minutes, was gifted a goal when Town keeper Alex Smithies allowed his shot to slip through his hands and trickle over the line.
James Vaughan made it 2-1 for the home side in the 77th minute, flicking home Wells’ cross.
Lynch sealed the three points when his perfectly-executed overhead kick cannoned in off the underside of the bar after Mark Hudson’s header from a corner.
Former Nottingham Forest defender Lynch was making his return after missing six matches with a hamstring injury - and also celebrated his 200th league appearance.
Town boss Powell said: “I thought Lynch was very good defensively in the first half. He has been out for five weeks and even though we have had decent results he has been a big miss.”