The result equals the record for the biggest win in the competition's final.
Pep Guardiola's men needed penalties to beat Chelsea in the Carabao Cup final and were run extremely close by Liverpool in the Premier League, but Sunday's (AEST) triumph was a procession as City rounded off an historic campaign in incredible fashion.
Although the first big chance of the game was created by Watford, a dominant City made it pay just before the half-hour with David Silva's first goal since December and Raheem Sterling doubled their advantage with 38 minutes on the clock.
Watford's positive start to the second period was futile and ruthless City swept it away in style, as Jesus set up substitute Kevin De Bruyne and then got in on the act himself.
Sterling rounded off a glorious day for Guardiola's men by completing his hat-trick with two in the last nine minutes.