The club have now moved quickly to appoint 74-year-old Hodgson on what is understood to be a short-term deal, initially running until the end of the season.
Hodgson becomes the 15th permanent appointment of the Pozzo family's less-than 10-year spell in charge of Watford, while the position is the 22nd Hodgson has taken up in his long managerial career.
"Watford FC is delighted to confirm the appointment of Roy Hodgson as the club's manager," read a statement on the club's official website
"The ex-England national team boss is joined by his trusted assistant Ray Lewington, who managed the Hornets so admirably from 2002 until 2005."
Hodgson, who is already the oldest manager in Premier League history, has been out of work since leaving Crystal Palace last summer.
The veteran manager's first game in charge will be away to Burnley on February 5. body check tags ::