Watterston, the son of a builder from Jedburgh, Scotland, was born on board a ship in New York Harbor. When Watterston was eight, his family moved to Washington D.C., his father attracted by the ongoing construction in the capital. He graduated from the Charlotte Hall Military Academy.
Watterston became a lawyer, first practicing in Hagerstown, Maryland, later partnered with Thomas Law in Washington. He became a man of letters, publishing his first novel, The Lawyer, or Man As He Ought Not to Be, in 1808. He also published the novel Glencarn; or The Disappointments of Youth (1810); a play, The Child of Feeling (1809); and a poem, The Scenes of Youth (1813).  Many of his works contained unflattering portrayals of his profession. In 1813, he became editor of the Washington City Gazette.
During the War of 1812, Watterston participated in the failed defense of Washington D.C. The British burned the capital, including the Library of Congress, which was then housed in the Capitol building. After war's end, Watterston was appointed by President James Madison as Librarian of Congress, the third person to hold the position and the first with that as his sole responsibility. (Previous librarians also served as the clerk of the House of Representatives). The Library was replenished by purchasing the collection of former President Thomas Jefferson and Watterston organized it based on Jefferson's basic classification scheme.
After his dismissal, he became editor of the National Journal and published books on many subjects, including biographies and works on agriculture. He was instrumental in the campaign to construct the Washington Monument and was secretary of the Washington National Monument Society.
- Matheson, William (October 1975). "George Watterston: Advocate of the National Library". The Quarterly Journal of the Library of Congress 32 (4): 370-388. Retrieved 20 October 2014.
- Roberts, Rebecca Boggs; Sandra K. Schmidt (2012). Historic Congressional Cemetery, Images of America. Arcadia Publishing. p. 117. ISBN 9780738592244.
- John Y. Cole (30 March 2006). "Jefferson's Legacy: A Brief History of the Library of Congress -- Librarians of Congress". Library of Congress. Retrieved 2008-12-15.