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.