Berghuis agreed personal terms with the Premier League club last week but the transfer was held up while the sides negotiated a fee.
But AZ have now reportedly accepted a bid close to £4.6m for the Dutchman who will arrive in London on Friday to undergo a medical.
The 23-year-old was AZ’s star player last season, scoring 11 goals in 22 league appearances, and he also attracted interest from Eredivisie champions PSV Eindhoven this summer.
The move will take Watford’s summer signings into double figures ahead of their return to the top flight.
Jose Manuel Jurado, Miguel Britos, Sebastian Prodl, Giedrius Arlauskis, Matej Vydra, Jose Holebas, Etienne Capoue, Valon Behrami and Allan Nyom have all put pen to paper on permanent deals at Vicarage Road.