The 56-year-old was appointed on a deal until the end of the season in December.
The Hornets suffered their 18th league defeat of the season to West Ham United on Friday, leaving them just one place and three points above the relegation zone.
Whoever takes charge at Vicarage Road will be Watford’s fourth manager of the 2019/2020 season, with Javi Gracia and Quique Sanchez Flores suffering dismissals before Pearson was appointed in December.
The former Leicester City boss took over with Watford bottom of the pile, but he instigated a mini-revival, including inflicting champions Liverpool’s first defeat of the season, to take the club out of the bottom three. Results have however been poor since the league resumed last month, with Friday’s defeat their fourth in seven games.
Pearson came to the Vicarage stadium with the experience of helping Leicester City avoid the drop back in the 2014/2015 season.
Having led the Foxes to promotion, Pearson kept them in the league despite Leicester City sitting bottom of the table and seven points from safety in early April.
Watford’s remaining games do not get easier as they host Manchester City on Tuesday before concluding the campaign at a rejuvenated Arsenal next weekend.
