But the first half remained scoreless and it wasn't until the 52nd minute that the South East side took the lead. Reilly was involved again as his corner kick was headed home by an unmarked David Mulcahy.
Derry enjoyed a good spell soon after though, and had an equaliser within seven minutes, when Peter 'Pizza' Hutton timed his run to perfection as he headed Gareth McGlynn's high cross past Dan Connor from twelve yards.
Man-of-the-match Reilly stole in for the United winner on 71 minutes when former Spurs striker Neale Fenn played him in, and his first time shot was slotted neatly beyond the dive of goalkeeper Gough.
Derry remain in ninth, with Waterford in fifth, but having played 27 games - two games more than sixth-placed Shamrock Rovers and 4 more than Bohemians in second. If Pete Mahon's UCD can overcome Longford at Flancare Park on Saturday night, the Candystripes will plunge to bottom and the 'Dykes out!' chants will have already begun.
Derry City : Gough, McCallion, Hargan, Hutton, McLaughlin, Doherty, McGlynn, Martyn (Deery 46), Clery (Friars 57), Beckett (Coyle 46), Holt.
Waterford United : Connor, McLaughlin, Breen, Mulcahy, Sullivan, Clifford, O'Brien (Mallon 90), Reilly, Fenn (Barnes 90), Murphy, Waters.