The 24-year-old left the Cumbrians in 2008 to join Nottingham Forest after scoring 19 goals in 53 games.
But the former Blackburn trainee was plagued by injuries during his time at the City Ground and eventually joined the Hornets in August last year.
Manager Greg Abbott told the club's official website: "We needed a bit of depth in that position and Joe is one who has experience of playing at this level and higher.
"We know all about his qualities from his time with us a few seasons ago and we're looking forward to working with him again. He has that hunger to play football, he wants to be here and we think this will be another of those moves which will work out well for everybody."
Garner has signed in time to be eligible to play against Crewe on Tuesday.
