Watson is expected to be released once he recovers from his pectoral injury, multiple media outlets reported.
The 6-foot-5, 315-pound Watson signed a three-year, $18.75 million contract with the Broncos on March 10, 2017, that included a $4 million signing bonus.
Watson started seven games in his first season with the Broncos. He sustained a foot injury in the Oct. 15 loss to the New York Giants and then missed the following game.
The 29-year-old has never played more than 12 games in any season because of a variety of injuries.
Watson had struggled when healthy, prompting a move to guard this offseason after the Broncos made a trade for Jared Veldheer to start at right tackle.
The release of Watson will hurt the Broncos given his $5.5 million base salary was guaranteed this past March. He will count for $6.83 million in "dead" money against the Broncos' cap since the team will release him after June 1.
Watson spent his first four NFL seasons with Oakland, starting 17 of 27 games for the Raiders. He was selected in the second round of the 2013 NFL Draft by Oakland.