The Watcher in the Water is a canonical monster from the Lord of the Rings continuum. All that is really known about it is that it lives in the water, it is large, and it has an ungodly number of slimy tentacles. In the Movies, it has a mouth similar to that of a squid, but with fangs instead of a beak, and on the top of its head along with a pair of eyes.
The Fellowship of the Ring encountered the Watcher outside the Gates of Moria, where it had been living in a stagnant pool caused by a dammed stream. It attacked Frodo specifically, leading Gandalf to observe that all the arms were driven by one purpose. Possibly Saruman had something to do with the attack, possibly not. Either way, it broke the doors behind the Fellowship, trapping them inside and leaving them no choice but to continue through the "long dark of Moria."
It is used sometimes as an assassination method by agents in the Tolkienverse.