Fox has had a strong summer, buoyed by hits "X-Men: Days of Future Past," which has grossed more than $730 million worldwide, and "Dawn of the Planet of the Apes," which has taken in more than $500 million.
In mid-July, Fox became the first studio to surpass $1 billion in domestic box office receipts in 2014.
Jim Gianopulos, who oversees the studio as chairman and chief executive of parent company 20th Century Fox Film, praised Watts in a statement.
"Emma is a proven and extremely talented production executive who has consistently led her division to great success, most recently through her stellar contributions to our remarkable summer slate," he said.
Fox's latest film, "Let's Be Cops," an R-rated buddy comedy, was released Wednesday, grossing $5.2 million on its opening day.
Watts has been president of production at 20th Century Fox since 2009; she previously served as co-president of production and executive vice president of production.
She could be joined at 20th Century Fox by another high-profile female film executive in the coming months. It is widely expected that DreamWorks Co-Chairman and Chief Executive Stacey Snider will soon depart that production company for a senior position at Fox, though the studio and Snider have never commented on her prospective move.
For much of the year, trade publications have speculated on the timing of Snider's potential DreamWorks exit and what her role would be at Fox. Snider's DreamWorks contract expires at the end of the year.
Fox and DreamWorks declined to comment.