The Italian is poised to depart Stamford Bridge after just one year to take over at Serie A champions Juventus.
Chelsea are unlikely to stand in Sarri’s way of a departure and have been weighing up potential options to replace him.
ESPN FC reports that Gracia, who led Watford to the FA Cup final and 11th place in the Premier League this season, is being looked at.
Massimiliano Allegri, who departed Juve after five years in charge at the end of the season, has also been touted as a candidate.
But sources told the outlet that the Blues hierarchy are reluctant to bring in a third consecutive Italian coach after the playing squad struggled with the approach of Sarri and his predecessor Antonio Conte.
Although Allegri will be considered, Gracia has impressed senior Chelsea figures with his coaching ability and style of football.
Club legend Frank Lampard has also been heavily linked with the role after guiding Derby County to the Championship play-off final in his first season in management, where the Rams were beaten by Aston Villa.
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