The 50-year-old becomes Valencia’s third full-time manager since the start of the recently-concluded La Liga season, after the sackings of Marcelino in September 2019 and Albert Celades last month.
“Valencia CF have reached an agreement with Javi Gracia, who has been appointed as first team coach as of Monday, on a two-year deal through to June 30, 2022,” the club said in a brief statement.
Gracia was dismissed by Watford, who were relegated from the English Premier League on Sunday, last September after a poor start to the campaign, just four months after taking the Hornets to only the second FA Cup final in their history, where they lost 6-0 to Manchester City.
His list of former teams also includes Russian outfit Rubin Kazan and Spanish sides Malaga, Osasuna and Almeria.
Valencia finished ninth in La Liga this season, missing out on qualification for Europe, and were knocked out of the Champions League in the last 16 by Italian club Atalanta.