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.
Playwright Frank MCGuinness will pen the screenplay for the project.
"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.