The 20-year-old Czech, one of Watford's loan stars from Italian side Udinese, beat off competition from Crystal Palace forward Glenn Murray and Blackpool winger Tom Ince at a ceremony in London on Sunday night.
Vydra has scored 20 goals this season to spearhead the Hornets' bid for promotion under Gianfranco Zola.
Murray missed out on the award despite notching 29 goals so far this term, a return which put him second only to Lionel Messi in Europe's top leagues.
Ince was able to celebrate, however, after being named Johnstone's Paint Young Player of the Year.
The 21-year-old, now managed by his father Paul, has hit 18 goals despite Blackpool's struggles this season.
Ince pipped Vydra and last year's winner, Crystal Palace's Manchester United-bound winger Wilfried Zaha.
The League One award went to Matt Ritchie, who started the season with Swindon before moving to their promotion rivals Bournemouth in January, with Port Vale's 25-goal striker Tom Pope collecting the League Two gong.
Bradford boss Phil Parkinson was rewarded for his unfancied side's remarkable run to the Capital One Cup final with the Outstanding Managerial Achievement award.
And legendary former England goalkeeper Peter Shilton, who played more than 1,000 Football League matches, accepted the Contribution to League Football award.
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- Glenn Murray