The 20-year-old has agreed a deal that will keep him at Vicarage Road until 2016.
Bond has become the second player to agree new terms with the club, after Lloyd Doyley signed a new contract on Wednesday.
Watford technical director Gianluca Nani told the club's official website: "Jonathan is a very good goalkeeper and has a great future ahead of him, so it's fantastic that he's agreed a new contract.
"We're very pleased that Jonathan has joined Lloyd Doyley in committing his future to Watford."
Bond has made 12 appearances for the Hornets.