The 17-year-old, who has been with the Hornets from the age of seven, has signed a two-year deal with the club having the option on an additional 12 months.
Byers follows in the footsteps of young striker Alex Jakubiak, who agreed a two-year contract last week.
Jakubiak, also 17, is eager to break into Beppe Sannino's first team regularly having made his full debut on the final day of the season.
He told Watford's official website: "I've been working really hard during the two years of my scholarship and this is what I've been aiming for at the end of it, and now I've been offered it I'm delighted. I'm over the moon.
"But this is just the start of it - everything is doubled or tripled now. It's going to get so much harder, but I'm ready for the challenge.
"We've got a couple of weeks off but I'm going to look to be working during that time so I can come into pre-season ready and firing, and hopefully impress the manager."