For Canada, Watson has appeared 78 times for the 'A' national team during a 14-year span. He has played in four World Cup qualifying campaigns. and on the 2000 CONCACAF Gold Cup side that won the tournament. Watson scored the winning goal for Canada in the semi-final of the 2000 Gold Cup, a match Canada won 1–0 over Trinidad and Tobago.
Watson began his coaching career in 2004 with the Canadian national team system where he held assistant positions with the U-20 and senior squads. Watson served as assistant coach for Canada at the 2004 CONCACAF Men's Olympic Qualification Tournament and was an assistant when the team finished third in the same tournament in 2008. He also spent four seasons on the staff of his former playing club Charleston Battery as an assistant to Mike Anhaeuser from 2006-09, helping lead Charleston to the final of the 2008 Lamar Hunt U.S. Open Cup.
After spending several seasons with San Jose Earthquakes as an assistant to his Canadian colleague Frank Yallop, Watson became the club's interim head coach on 7 June 2013 following Yallop's dismissal. Watson's first win as an MLS head coach came on 15 June 2013 against the Colorado Rapids at Dick's Sporting Goods Park. Watson was 11-5-3 during his 19 league games as interim coach, nearly rallying the Earthquakes to an MLS Cup Playoff berth. His mark 1.89 points per game was tops among all coaches after he took over. In addition to his success in MLS, Watson's squad advanced to the 2013-14 CONCACAF Champions League Quarterfinals by winning Group 5. Following these successes, on 30 October 2013 the Earthquakes announced that they had signed Watson to a permanent contract, thereby removing his interim status. After a disappointing season in which the Earthquakes failed to qualify for the playoffs, Watson was dismissed in late 2014.