The NFL Network first reported the news.
A possible candidate to earn a starting job at free safety last season, Watkins suffered a torn ACL during a preseason game against the Seattle Seahawks when teammate Melvin Ingram fell on his right leg.
Watkins, 27, who had signed a one-year deal with the Chargers prior to last season, spent the entire year on injured reserve.
"He was kind of going to be a nickel corner, a little bit of a safety," Chargers general manager Tom Telesco said during his end-of-the-season news conference last month about Watkins. "We didn't have him on the field long enough to see exactly what his role was going to be."
A fourth-round selection by the Philadelphia Eagles in the 2014 draft, Watkins finished with 56 combined tackles, eight pass breakups and no interceptions in four years with Philly.