Taylor passed away on January 12 and the club have been working on plans to pay tribute to their former manager.
Watford have confirmed that a statue celebrating his career in football will be erected outside Vicarage road, while a pre-season tribute fixture is also on the cards.
The Hornets said they will work closely with fans’ representatives and the borough council to ensure they create a lasting memory for the ex England boss.
A statement on Watford’s website said: “A statue of Graham is to be commissioned and sited at the stadium, with its location to be agreed with Graham’s family and Watford Borough Council.
“In addition, a pre-season tribute fixture – which is expected to become an annual opportunity to remember Watford’s greatest-ever manager – will be arranged to take place at Vicarage Road Stadium ahead of the Hornets’ 2017/18 campaign.
“Watford FC is pleased to confirm that it will engage with fans’ representatives to ensure that supporters play a lead role alongside the club in bringing the statue to life. Again, Graham’s family are very supportive of these actions.”