Suarez, 22, has inked a five-year deal with the La Liga side for a fee that could top £11m (€11m).
Watford also inserted a sell-on clause in the sale of the highly-rated Suarez.
🔴 El delantero Luis Suárez se incorpora al #Granada
🖊️ Firma por cinco temporadas
📷 Será presentado esta tarde
— Granada CF ❤️⚪️ (@GranadaCdeF) October 2, 2020
Atletico Madrid were one of the clubs who looked at Suarez this summer, following his impressive loan spell in Spain’s second tier with Zaragoza.
Last season, he clocked up 19 goals and six assists in 38 appearances for his loan club, helping them into the play-offs.
Suarez joined Watford from Leones in 2017 but never appeared for the Hornets in his three years at the club.
Instead, he was loaned out to Real Valladolid B, Gimnastic and finally Real Zaragoza.