The Mexico international joined the Hornets in January, helping them to promotion to the top flight, but now could be in Champions League action with Porto.
Watford said on their official website: "Watford midfielder Miguel Layun will spend the rest of the 2015/16 campaign on loan to FC Porto."
Layun played 17 times for Watford after completing a permanent switch from Granada on a four-and-a-half-year deal in January 2015.
He has played four times for the Hornets this term and scored his only goal at Everton on the opening day of the season.
Source : PA
Source: PA