Wiley joined Chelsea last year after playing for Atlanta United in the United States.
Watford's sporting director, Gianluca Nani, expressed his enthusiasm for Wiley's return, saying, "He was impressive in the games he played for us last season, and his attitude is truly exceptional."
Nani also stated that having Wiley for a full season will bring the defensive consistency that manager Paulo Pezzolano desires.
In his own words, Wiley said, "I'm a player who combines tactical knowledge with a strong attacking presence and plenty of potential to score goals."