Sam Brown feared he would never see his watch again after it fell off when he fell in the River Orwell in July 2014.
But it was found last week during the annual dredging of the silt at the Suffolk Yacht Harbour.
The Rolex Sea Dweller was a 50th birthday present from his wife Camilla Herrmann, who gave it to him on the day their son was christened.
Ms Herrmann said her husband, who had a stroke three years ago which affects his mobility and speech, is "so delighted" to have it back.
The watch, which was designed for diving, was bought second-hand in 1990 and a replacement would now cost Â£6,500, Ms Herrmann said.
"It was one of the best presents I've ever given him. It's engraved on the back, saying 'to Sam from Camilla, with love and thanks'. It was not just a nice watch, but something that had quite a lot of significance on different levels," she said.
It "disappeared completely" when her husband, who is a former professional diver, fell in the river while walking down the jetty to their boat, she said.
"I normally wheel him, but it was a nice morning and he wanted to walk. He dropped his walking stick and he bent down to pick it up and he just kept on bending," she said.
He was taken to hospital and made a full recovery but remained upset about the watch, Ms Herrmann said.
"It was just sad. The most important thing though was that Sam was still with us," she said.
The couple, who have two sons, had "totally given up" on finding it until last Sunday when they received a phone call from someone who checks what is pumped out of the dredger.
It was found in the same area where Mr Brown dropped it. "I was stunned into silence, I didn't know what to say. It was absolutely extraordinary. He recognised it by the engraving on the back and managed to track us down" she said.
The watch now only works if you move it, but they will be sending it off to be repaired in the new year.
"I can't tell you how pleased he is. He was just wreathed in smiles when he got it. He was going around saying 'I can't believe it, I can't believe it'. He was more than touched," she said.
A 75-year-old man has been reunited with his cherished Rolex watch, a year and a half after he lost it in a river.