The Airlie Birds announced shortly before lunchtime on Wednesday that the 27-year-old had left the club with a move to another Super League club having been agreed.
Moments later, Castleford confirmed the front rower had joined his hometown club in a three-year deal.
The 27-year old started his career with Hull KR before moving across to the Black and Whites in 2012, where has gone on to win back-to-back Ladbrokes Challenge Cup trophies.
Castleford director of rugby Jon Wells, said the club had brought in a player entering the prime of his career.
“Liam is an experienced, top line, hard-nosed forward who we feel will be an outstanding addition to an exceptional and motivated group of players,” said Wells.
“At 27, Liam is entering the prime years of his career and we are delighted that he will be spending those years at Castleford.”
Hull are understood to have lost patience with Watts, who has been sent-off four times in less than a year.
He is currently serving a three-game ban after being red carded for butting Warrington Wolves’ Dom Crosby in a Betfred Super League fixture 12 days ago. Hull’s coach Lee Radford was clearly unhappy with Watts after that game, describing the incident as “pathetic” and the East Yorkshire side nohave now decided they can manage without him.
Radford said: “I would like to wish Liam all the best moving forward and hope he can find some consistency off the field to benefit his career in the future.
“We have some great, young, enthusiastic front rowers coming through at the club who are appreciate our values and behaviours and they will benefit from more game time.”
Watts said the move had been put together quickly, adding he was looking forward to playing for the club he suported as a youngster.
“It’s a move I couldn’t let pass me by,” said Watts. “I’m really looking forward to linking up with the rest of the forwards here at Cas. If there was one team in the league that was going to suit my style of play then it’s definitely Castleford. They are a big set of lads here but they are a good set of lads also.”