The Hornets have been struck down with injury recently, and Sky Sports have reported that the two clubs have agreed a loan deal until the end of the season.
Walter Mazzarri has the option to make the move permanent in the summer for the midfielder, who has made just four starts in the Premier League this season.
Midfielder set for Watford medical
The 27-year-old made the move to Goodison Park from Manchester United in June 2015, but after making 22 appearances in his debut season, he has struggled to hold a place in the side since.
Cleverley made his debut for the Toffees against Watford at the start of last season, where the two sides played out a thrilling 2-2 draw.
The midfielder’s future is in doubt at Goodison with France international Morgan Schneiderlin now set to join Ronald Koeman’s side.
Watford are set to gain an experienced midfielder in Cleverley as they are looking to keep their place in the Premier League.
Hornets slipping down league table
The Hornets started life under Mazzarri well and picked up wins against United and league champions Leicester City, but have slipped in the table after a recent slump in form.
They have fallen to 14th in the table and are seven points clear of the relegation zone, but the Italian head coach wants to bring in new additions to help regain the form they had earlier in the season.
Watford haven’t won any of their last five Premier League games and have picked up a single point from a possible 15 in those games.
Former Red Devil Cleverley may well be one of the answers to one of Mazzarri’s problems, the midfielder won countless trophies in his time at Old Trafford.