Just days after Watson celebrated his 100th NRL appearance, the Knights announced on Tuesday that Watson had accepted a deal elsewhere and would leave after four seasons in the Hunter.
There has been no official statement on Watson's next move, but NRL.com understands the Roosters are leading the race to secure his signature.
"The 25-year-old remains fully committed to finishing the 2021 season and his time at the Knights with the commitment and tenacity he has always shown throughout his career," the statement read.
"Our team’s focus now moves firmly towards our match this weekend against the Bulldogs.
"The Knights wish Connor and his family all the best in their future endeavours."
Roosters coach Trent Robinson confirmed last week that he had spoken with the 25-year-old about a return to the Tricolours.
Watson played 38 games in red, white and blue after being handed a 2016 debut by Robinson, who has always rated the Central Coast junior highly.
Robinson reluctantly agreed to release Watson in 2018 when he fielded a lucrative Knights offer and the chance for more minutes.
It's understood the premiership-winning coach has always ranked Watson as one of the few Roosters that got away during his time.
Watson's looming return to Sydney comes after a strong 2021 campaign, playing 21 games for Adam O'Brien at lock, five-eighth and as a bench utility.
A long-term ankle injury limited him to just five games in 2020 and saw both he and the Knights come to terms on a short-term one-year deal last year, Watson backing himself to earn a longer contract when he returned to full fitness.
Newcastle's three-year offer presented exactly that, but the lure of returning to the Roosters is set to ultimately win the day.
Story first published on NRL.com