The right-arm seam bowler dismissed Ireland captain William Porterfield on the very first delivery of the match and added to his account at crucial moments to stymie the qualifying winners.
Porterfield won the toss and elected to bat first at R. Premadasa Stadium but he failed as an opening batsman to a first-ball duck. Porterfield tried to hook a bouncer but ended up only top-edging the ball for a comfortable catch at deep fine-leg by Mitchell Starc.
Watson and Starc were involved again in the dismissal of Paul Stirling when Ireland's total was 15. The batsman sliced the ball against Starc, the left-arm seamer, and was well caught by Watson at third man.
Ed Joyce tried to lift the ball over the infield against offspinner Glenn Maxwell but found David Warner at mid-off on 16. Left-arm chinaman bowler Brad Hogg broke through in his second delivery trapping Gary Wilson lbw for 5 in the eighth over.
At 33-4 Ireland was precariously placed, then brothers Kevin (35) and Niall O'Brien (20) combined for 52 to help set up a decent total.
Kevin hit five boundaries during his 29-ball innings and Niall made 20 off 24 balls before Watson dismissed both in the 15 over, bowling Niall and, three balls later, having Kevin caught by wicketkeeper Mathew Wade.
Starc gave Watson good support in returning 2-20.