The 48-year-old Spaniard picked up the prize for leading the Hornets to three consecutive victories in August, catapulting them into the top four.
Gracia's season has shown no signs of slowing down in September, as Watford began the month with a superb 2-1 victory over Tottenham at Vicarage Road, leaving them third only on goal difference.
Their fantastic form has prompted early comparisons with Leicester, who won the 2015/16 Premier League in hugely unlikely fashion.
However, if Gracia is to emulate Claudio Ranieri's acheivement, he faces a stern test when Watford take on Manchester United on Saturday, September 15 after the international break.
Played: 3
— Premier League (@premierleague) September 7, 2018
Won: 3
Javi Gracia is @BarclaysFooty Manager of the Month for a brilliant August with @WatfordFC #GameChanging #PLAwards pic.twitter.com/qGQ1PZvVmD