The 26-year-old spent the 2014-15 campaign at Depor, making 34 league starts as the Galician side finished 16th in the Primera Division.
A statement from Deportivo read: “The club has reached an agreement with Watford and Juanfran for the player to join Deportivo on loan this coming season.
“Juanfran will arrive tonight in A Coruna and will join the team in training on Friday morning.”
After spells at Getafe, Villarreal and Real Madrid as a youngster, Juanfran moved to north London last season in a £1m deal following an impressive season at Real Betis.
His deal with the Hornets runs until June 2016.