20 year-old Watson expressed his delight at extending his contract with the Tricolours.
"I'm very excited to extend my time with the Roosters," said Watson.
"I'm learning so much from Robbo (head coach Trent Robinson) and the coaches, and this is where I want to build a career.
"I know I still have a lot of improvement in me, and hopefully I'll keep learning and improving and secure an opportunity to play some good footy for the Roosters," he added.
Robinson said it was exciting to have Watson extend his arrangement with the club.
"I've really enjoyed watching Connor's development over the last few years," said Robinson.
"Connor is a natural ball runner who trains hard.
"He's also a great young man, so I'm really looking forward to continuing to work with him and watching his development over the next few seasons."
Watson made his NRL debut in Round 7 of the 2016 season, playing 16 games in his rookie year.
This announcement caps off an exciting week for the Roosters, with the club surpassing 10,000 members last Thursday.
This is the fastest that the Roosters have ever reached 10,000 Members, with more than 9,000 of those being Membership renewals and 1,000 new members joining the club.
The Roosters extend their thanks to the 10,000-plus members who have pledged their commitment to their team by renewing or joining as a 2017 Sydney Roosters member.
Further information about the Roosters extensive range of full season and flexi Membership options can be found by visiting membership.roosters.com.au