The 24-year-old has scored one goal in five appearances for the Cumbrians since arriving for a second spell at the club in the middle of last month.
"The good thing about this one is that Joe was keen to stay and we were keen to keep him here," manager Greg Abbott told the club's official website. "He's already shown us that he can be a real thorn in the side and that he's difficult to handle. He hasn't had regular pitch time for a good while and we think he will get better and better as he gets more games under his belt.
"He's a really hard worker and has come to is with an excellent attitude and a desire to play the game. Hopefully he'll continue to improve and, if he does, we think he'll be doing a real job for us."
Garner first joined Carlisle from hometown club Blacdkburn on a half-season loan in January 2007 and made the move permanent the following summer.
He scored 19 goals in 53 appearances for the Cumbrians before sealing a move to Nottingham Forest in the summer of 2008, but found a first-team place hard to come by at the City Ground and joined Watford for an undisclosed fee in August last year.