After a run of just one victory in their last 11 Premier League games, Watford have chose to sack yet another manager, with the club now appointing Gracia, their ninth manager in six seasons.
Gracia, 47, takes over as Watford's 10th manager on an 18-month contract at Vicarage Road.
Garcia, former Malaga, Osasuna and Almeria's coach, is now not managing any team after having rescinded his contract with the Russian Club Rubin Kazan last summer. Their next game is an FA Cup fourth-round meeting with Southampton on Saturday.
The fiasco involving the previously vacantEverton job also proved to be a key factor in the exit of the Portuguese national, but The Hornets have been swift in announcing his replacement with the travelled Gracia taking over the reigns.
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Prior to Everton's approach for Silva, Watford had won four, drawn three and lost four from 11 league games.
A statement from the club claimed that the team's decline in form came after an "unwarranted approach" for Silva from another Premier League club.
The 40-year-old former Hull City boss had been regarded as one of the outstanding managers of the first half of the Premier League season and was heavily courted by Everton.
The club were expected to fight for survival during a time when the club were experiencing serious financial difficulties, but Gracia led the Spanish side to eighth and ninth place finishes.
Watford said Everton's approach for Silva in November was the "catalyst" for their decision to sack him.
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