Watson resigned from his post as manager of Vanarama National League side Gateshead this morning and will commence his new role on Monday.
He will be joined by former Rotherham United midfielder Micky Cummins, who has also resigned today from his role as Gateshead’s assistant-manager.
Watson, 44, moved into coaching nine years ago after an illustrious playing career with Newcastle United, Aston Villa, Everton, West Bromwich Albion and the Owls.
He was employed as a coach by Huddersfield and Birmingham City and assistant-manager at Macclesfield Town before accepting his first managerial role at Gateshead in October 2017.
Watson ensured Gateshead survived in the National League last season and reached the semifinals of the FA Trophy. This season, he has steered Gateshead into the promotion race with the club currently sitting eighth in the table.
“The challenge of taking this club back through the leagues is an exciting one for any young manager,” said Watson. “It will take a lot of hard work but I am more than willing to roll my sleeves up and I can’t wait to get started.
“There are probably only two clubs in National League North that are ‘League clubs’ waiting to happen again and York is one of them. There is huge potential here and my job is to realise that potential.”
A statement from City’s board of directors said: “We are delighted to welcome Steve Watson to the club as first team manager along with his assistant Micky Cummins.
“The board conducted a series of interviews with a number of candidates but Steve impressed with his considerable experience as a player and coach, his knowledge of the game at all levels, and his vision for the club.
“He has demonstrated an ability to be successful on a limited budget at Gateshead and is prepared to step down from a higher league to strive for success at York City Football Club.”
“The board will now be fully supportive of their aims and ambitions and wish the pair every success in their task.”