The 20-year-old impressed during seven league starts for Watford last season and has been rewarded with a contract that runs until the summer of 2016.
Bond has followed the lead of defender Lloyd Doyley, who extended his stay with the club earlier in the week, and Watford's technical director Gian Luca Nani has welcomed the youngster's decision.
"Jonathan is a very good goalkeeper and has a great future ahead of him, so it's fantastic that he's agreed a new contract," said Nani.
"We're very pleased that Jonathan has joined Lloyd Doyley in committing his future to Watford."
Bond made his debut for the Hornets as a substitute against Portsmouth in January 2012 and was given further chances to display his potential the following season.
Having come on as a first-half replacement for Manuel Almunia against Derby County in February, he went on to make seven League starts.
Bond was sidelined by a broken nose in May, but he was among the substitutes as Watford missed out on promotion in the play-offs.