The former Italian international won the Champions League in 2012, and is available after leaving Schalke this week.
With no positive news coming out of the club regarding Slavisa Jokanovic extending his stay at Vicarage Road, it looks increasingly likely that the Serb will be departing and Watford looking for their fifth manager since last August ahead of their return to the Premier League.
Though ex-Atletico Madrid boss Quique Flores is reported as being one of the front runners for the top job at the Hornets, by sources such as the Guardian, there is another slightly more familiar name who has been associated to the position.
Roberto Di Matteo, fresh from a short stint at Schalke, is also an option according to the Express, and will be much more familiar to English football than the Spaniard after his time in charge of West Brom, Chelsea and MK Dons.
It was back at Stamford Bridge that the Italian enjoyed his greatest triumphs as a manager, leading the Blues to an unlikely Champions League penalty shootout win over Bayern Munich as well as a FA Cup victory.
If Di Matteo came in at Vicarage Road, he would be following his former Stamford Bridge teammate Jokanovic, with the Serb joining Chelsea for two years before both players departed in 2002.