Rose was released by Spurs at the end of last season, 14 years after joining the London club from Leeds United.
The left-back was left out in the cold at Tottenham in the 2020-2021 campaign, training with the Under-23s after being loaned to Newcastle United in the previous season.
Rose has been given the opportunity to remain in the top flight by the newly-promoted Hornets, a club he played for seven times in a loan spell back in 2009.
“I used to play here against Watford for Tottenham and the fans once the place is rocking are different gravy!”— Watford Football Club (@WatfordFC) June 16, 2021
🎬 𝐃𝐚𝐧𝐧𝐲 𝐑𝐨𝐬𝐞: 𝐓𝐡𝐞 𝐅𝐢𝐫𝐬𝐭 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 🎬
The 30-year-old has been capped 29 times by England, featuring for his country at Euro 2016 and the 2018 World Cup and last appearing against the Czech Republic in October 2019.
He was included in the PFA Premier League Team of the Year in both 2015-2016 and 2016-2017.
Rose started for Spurs in the 2015 League Cup final defeat to Chelsea and the Champions League final loss to Liverpool two years ago.