The club's former manager passed away in January
Watford will build a statue of former boss Graham Taylor outside Vicarage Road.
The Premier League club say they will also arrange an annual pre-season fixture in his memory.
Ex-England and Aston Villa boss Taylor passed away last month aged 72.
He was best known for leading them from the fourth tier to second in their maiden top flight season in 1982-83 as well as to the 1984 FA Cup final.
The club confirmed the tributes they will make on their website: "With the blessing of Graham Taylor’s family, Watford FC will move forward with two significant tributes to the late Graham Taylor OBE.
"A statue of Graham is to be commissioned and sited at the stadium, with its location to be agreed with Graham’s family and Watford Borough Council.
"In addition, a pre-season tribute fixture – which is expected to become an annual opportunity to remember Watford’s greatest-ever manager – will be arranged to take place at Vicarage Road Stadium ahead of the Hornets’ 2017/18 campaign.
"Watford FC is pleased to confirm that it will engage with fans’ representatives to ensure that supporters play a lead role alongside the club in bringing the statue to life. Again, Graham’s family are very supportive of these actions.
"Further details about both tributes will be published as soon as they are confirmed."