Suicide bombers conducted a series of attacks on London Underground trains and a double-decker bus, killing 52 people and injuring 700 on 7 July, 2005.
Watson, 47, will play Julie Nicholson, whose daughter, Jenny, was killed at Edgware Road underground station in the bombings, reported BBC.
A Song For Jenny will be based on Nicholson's memoir, 'A Song for Jenny: A Mother's Story of Love and Loss', and will air in July, 2015 on BBC One to mark the 10th anniversary of the tragedy.
"Although daunted by the task ahead, as a Londoner who was there on 7/7, I feel honoured to be part of the team asked to tell this compelling story. I hope we can do it justice," Watson said.
"Despite the poignancy of the subject, I am delighted that my memoir has inspired the re-telling of Jenny's story for film. I believe it is in safe hands and I have long admired and respected the work of Frank MCGuinness," Nicholson said.