Watson was born in Bristol to a Welsh mother and English father. He has younger twin sisters called Emma and Lucy and a brother, Paul. He attended Henleaze Junior school and then Bristol Grammar School, an independent day school where he won the prize of 'Gabbler of the Year', before going to Queens' College, Cambridge, where he studied English, graduating with first class honours. At university he was a member of the Footlights and contemporary of Stefan Golaszewski, Tim Key and Dan Stevens. He was part of the revue which was nominated for the Best Newcomer category in the Perrier Comedy Awards at the 2001 Edinburgh Festival Fringe and also co-directed a revue with Key.