Centre Joseph, 25, who has scored 16 tries in 58 appearances for Bath, has been capped 25 times by his country.
The most recent of his nine England tries came on the tour to Australia, on which he played with Watson.
Versatile back Watson, 22, has 12 tries from his 67 games for Bath and 24 caps for his country.
The pair both joined from London Irish in 2013 and started in the 2015 Premiership final, where they lost to Saracens.
However, last season the Blue, Black and Whites finished ninth and failed to qualify for the European Champions Cup.
Bath first-team coach Toby Booth said: "I've known both Jonathan and Anthony for a long time now, and I'm really pleased they've committed the really important years of their careers to the club.
"They are both exceptionally talented players who since gaining greater international experience are having much more of a positive effect on the group - both on and off the pitch."
England internationals Jonathan Joseph and Anthony Watson have signed new Bath contracts, keeping them at the Premiership side until at least 2019.