The winger will be their ninth signing of the summer in a busy transfer window so far.
The Hornets will pay £3.5million for the Holland international, who has been heavily linked with a move to Dutch champions PSV Eindhoven in recent times.
He will become the club’s ninth summer signing ahead of their return to the Premier League next season, with them already having secured deals for Etienne Capoue, Giedrius Arlauskis, Sebastian Prodl, Jose Holebas, Valon Behrami, Matej Vydra and Allan Nyom already.
The 23-year-old had graduated through the youth levels to feature for the national side and had a decent season last year as he scored 11 goals for AZ. He can play on either flank or as a No10, giving his side plenty of options, reports the Guardian.
Too many new signings?
Given the way Watford have started this summer transfer window; it is easy to imagine that Berghuis will not be the last player to join the Hornets this summer.
It is however a dangerous road to take introducing so many new players to the squad, with them all needing time to adapt and settle in in their new signings. There is also the chance those at the club, who got them to the Premier League, may be upset with new players coming in to take their place.
However one positive is that the club has done their business early, allowing them, and their new boss, plenty of time to settle in at Vicarage Road. Whether so many new recruits prove to be a wise move, remains to be seen next season.