The Italian coach, who has previously worked at Palermo and Siena in Serie A, joined the Hertfordshire-based club in December 2013 following the departure of Gianfranco Zola.
He prevented a potential relegation battle by keeping the club in mid-table, shoring up the defence and leading the Hornets to a record sixth consecutive home win without conceding.
However, Sannino's management style was reportedly distressing the players, and following a 4-1 home defeat to Huddersfield Town on the final day of last season, a dressing room bust-up was rumoured to have occurred - with the 57-year old intending to keep the players training into their pre-booked holidays.
Despite these rumours, the Italian remained at Vicarage Road, and his confirmation as full-time manager occurred during the pre-season. He led the Hornets to a 3-0 opening-day victory over Bolton Wanderers, and has won three of his four games this season - with the only loss coming at Norwich City after being reduced to 10 men from the second minute of play.
During the 2-0 victory over Rotherham United on Tuesday night, Sannino was victim of an angry outburst by goalscorer Lloyd Dyer, who was left on the bench at start of the game.
Having entered play and scored the opening goal, former Leicester City man Dyer sprinted half the pitch to show his frustration at the coach, and his reaction has been the source of the rumours of a 'lost dressing-room'.
The Watford Observer claimed that Sannino's future with the Hornets is in serious doubt, and the Italian has quickly become favourite for the next manager to leave his post.
BetVictor had Sannino at 40/1 to leave his post before the Rotherham game, although that quickly rose to 4/5 in the aftermath of the on-pitch events.
The likelihood of the Italian leaving is remarkably high in the current situation, although any changes to personnel will likely be delayed until after the round of Championship fixtures on Saturday.
A potential replacement has yet to be revealed to the public, although former AC Milan and one-season Watford defender Filippo Galli, and current Pozzo family technical director Francesco Guidolin are the likely replacements.