The pair will work in the Saints’ new management structure, with Watson heading up the goalkeeping department and Lee coming in as first-team assistant coach.
Watson, who remains part of Roy Hodgson’s staff, joins the club from Norwich City.
Ex-Liverpool man Lee, who won 14 caps for England, has left his post at Bolton Wanderers academy to work as Koeman’s No2.
“At this stage of my coaching career, the opportunity to work again at the very top level of English football was not something I felt I could turn down,” he said.
Sammy Lee is the new assistant coach at Southampton
Another former England man, Martin Hunter, who coached various youth sides during his time at The Football Association, has been appointed as technical director after spending four years in charge of the club’s development squad.
Upon the appointments, Southampton executive director Les Reed said: "I am extremely happy that we have been able to appoint three highly-respected and talented coaches to these important positions in our coaching structure.
"Sammy has a wealth of experience from his time with Liverpool and Bolton, as well as from his long association with the England team.”
He added: "Despite his relatively young age, Dave has already built up an impressive CV and is regarded as one of the most talented goalkeeping coaches in Europe, and has only just returned from the World Cup finals.
"That we have been able to attract Sammy and Dave to Southampton is testament to our ambition to continue growing as a club, and shows our commitment to develop talented footballers at all age levels."
