In 1969, when Watanabe played for Yawata Steel (later "Nippon Steel"), he became a playing manager. He managed the club until 1975. In 1979, he became an assistant coach for Japan national team under manager Yukio Shimomura. At 1980 Summer Olympics qualifying in April 1980, following Japan's failure to qualify for 1980 Summer Olympics, Shimomura resigned a manager. In May, Watanabe was promoted to manager as Shimomura successor. However, just before 1982 World Cup qualification in December, he suffered a subarachnoid hemorrhage and replaced to Saburo Kawabuchi.