The 46-year-old Italian has signed a two-year contract at Vicarage Road.
"Everyone knows how Gianfranco Zola likes football to be played," said Watford's Technical Director Gianluca Nani of the appointment.
"I think Watford's fans can expect an exciting and attacking style from his team. Gianfranco represents this project perfectly."
Zola gained initial coaching experience working with the Italy Under-21 squad shortly after he'd retired from playing at the age of 39.
The Sicilian then guided West Ham United to a ninth-place finish in the 2008/09 Premier League, before parting company with the Hammers at the end of the following campaign.
The former Napoli, Parma and Chelsea goalscorer was capped 35 times by Italy during a glittering playing career which included title-winning medals at club level for the UEFA Cup, UEFA Cup Winners' Cup, England's FA Cup & League Cup as well as Serie A in Zola's home country.
NOTE TO SPORTS NEWS DESKS:
A press conference will be held at Vicarage Road during week commencing Monday July 9, officially introducing Gianfranco Zola as Watford's manager.
To apply for accreditation (which will include full details once finalized), please e-mail email@example.com