The 26-year-old American defender, who would have been out of contract at Vicarage Road this the summer, has signed a new two-and-a-half-year deal with The Hornets.
"All I want is for us to be turning out against the likes of Chelsea, Arsenal and Manchester United every week," DeMerit said.
"We are fourth in the table, and I really believe we can achieve promotion this time round."