Rajasthan's nine-run victory over the Kolkata Knight Riders in Mumbai moved them into second spot on the ladder and into a strong position to secure a place in next week's finals.
Watson was the stand-out, smashing an unbeaten 104 from just 59 balls including five sixes in Rajasthan's 6-199 and chimed in with 2-38 with the ball as Kolkata fell short.
His Royals teammates, fellow Australians Steve Smith and James Faulkner, didn't stick with Watson for long, making just 14 and six respectively.
AB de Villiers, Chris Gayle and Brendon McCullum are the only other batsmen to score centuries this IPL season.
"That's as good as I've batted in a long while, especially in T20 cricket," Watson said.
In the other match on Saturday, bottom-of-the-table Kings XI Punjab's woeful season continued with a seven-wicket loss to the Chennai Super Kings in Chandigarh.
Skipper George Bailey, batting higher up at No.3, made just 12 and Glenn Maxwell couldn't get going again in making six off 14 balls.
Set 131 for victory, top-of-the-table Chennai cruised to victory in the 17th over.
Mike Hussey, in his first game for the Super Kings this season, made just one opening up with McCullum, but Faf du Plessis (55), Suresh Raina (41no) and MS Dhoni (25no) got the job done.
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