The 35-year-old defender had been training with former club Blackburn Rovers after his contract with J-League side Omiya Ardija came to an end.
Yet Neill has now signed a short-term deal with Giuseppe Sannino's side, subject to international clearance, and will be keen to gain regular football with the FIFA World Cup on the horizon.
"I want to add my experience to the Watford squad and I'm hoping that some of my natural leadership skills can benefit the group here," he told the club's official website.
"I'm highly motivated to keep playing. There's still a huge passion within me for football.
"I've had experience in different territories across recent years. I took up challenges in different countries because I wanted some new experiences – but this is a great chance for me to play at an excellent level and help Watford finish the season as strongly as possible."
Watford become Neill's fifth club in England, and the first since he left Everton in 2010 for Galatasaray.
He joins Watford with the club 12th in the Championship and eight points adrift of the play-off positions.
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