Watford, who sit 10th in England's top flight, announced that the 47-year-old Spaniard had signed an 18-month contract, becoming the club's 10th manager since 2012.
Watford have reportedly sacked manager, Marco Silva, following their awful run of just one win in eleven Premier League fixtures and have blamed Everton's "unwarranted approach" two months ago as a "catalyst" behind the decision.
Former Malaga manager Javi Gracia is being lined up to replace Marco Silva at Watford.
The 47-year-old Spaniard, who has been out of work since leaving Rubin Kazan in Russian Federation in June, made a name for himself in the dugout in his homeland with Malaga.
Watford announced the most surprising managerial decisions of the season so far when they chose to sack Marco Silva this morning.
Silva, 40, joined the London club on a two-year deal in the off season after leaving relegated Hull City at the end of last season.
However, Silva has since won just one of the last 10 games, and after losing 2-0 at Leicester City on Saturday afternoon, Silva has been given his marching orders.
"For the security and success of the football club, the board believes it has to make a change", Watford's statement said.
Gracia's first match in the Watford dugout will come in the FA Cup next Saturday when his side take on Southampton in the fourth round. "The Club will seek to make a swift appointment and there will be no further comment until that appointment has been made" added the statement.