HITC Sport understands the forward has signed a three-and-a-half year deal at Birmingham.
Birmingham City have completed the signing of Watford forward Diego Fabbrini on a three-and-a-half year deal, HITC Sport understands from sources close to the club.
As revealed by HITC Sport, Fabbrini was undergoing a medical at St Andrew's after Birmingham agreed a fee in the region of £1million with Watford for the Italian.
Fabbrini began this season on loan at Middlesbrough, but after finding himself dropping down the pecking order in Aitor Karanka's plans Birmingham made their move to sign the player.
Birmingham boss Gary Rowett is a big fan of Fabbrini having worked with him during a loan spell at St Andrew's last season.
Fabbrini played five games for Birmingham last season and they were hoping to land him last summer only to lose out to Middlesbrough for his signature.
Middlesbrough agreed to cut short Fabbrini's loan deal at the Riverside after completing the signing of Gaston Ramirez on loan from Southampton.
Birmingham have been busy in the transfer market so far this month bringing in James Vaughan and Will Buckley and they see Fabbrini as another key addition to their squad as they look to continue their push for promotion to the Premier League.