The winger - the son of former FA chief executive, Ian - will become the second new addition at Easter Road this week, with Notts County striker Danny Haynes also due to arrive on loan.
Terry Butcher, the Hibs manager, had identified the frailty of his side's attack as a cause for concern and has duly moved for Haynes and Watmore. The latter was scouted by Butcher personally earlier this season and had also been linked with St Mirren, Partick Thistle and Kilmarnock.
The 19-year-old made his first-team debut for Sunderland earlier this month during an FA Cup victory over Carlisle United and has now been sent north to gain further competitive experience with Hibs. A quick, inventive wide player, Watmore signed a two-year contract at the Stadium of Light last summer after a spell with Altrincham.