The Panerai watch, made in Italy using Rolex movements, is believed to be one of only 618 made between 1941 and 1943.
The timepiece was found during a furniture valuation and is believed to have been taken home by a British soldier as a trophy or souvenir.
It was sold through Great Western Auctions in Glasgow for £54,560.
The watch was believed to have been worn for a short time but had spent many years unused in a drawer in a Lanark home.
The watches were used by "Kampfschwimmer" frogmen in the German and Italian navy during World War Two.
Anita Manning, managing director of Great Western Auctions, said: "The bidding was fierce.
"There was interest from Japan, Europe and America on the internet and telephone bidding, as well as from collectors in the room.
"The bidding started at £20,000 and raced upwards, with the winning bid coming from a private European collector."
He added: "The watch was found on a routine furniture valuation in Lanarkshire.
"It had been lying unused in a drawer for nearly 70 years. The vendors, who had no idea of the value, were ecstatic with the result."
A rare German military watch which lay in a drawer in a Lanarkshire house for almost 70 years has sold for more than £54,000 at auction.