The 21-year-old British number three won eight games on the bounce against Stephanie Foretz to lead 6-0 2-0 at Melbourne Park.
And that proved enough as France's Foretz retired hurt, meaning that Watson is now just one win away from the main draw Down Under.
Standing between her and the Australian Open is American Irina Falconi who emphatically dispatched Chanel Simmonds 6-2 6-0.
But Watson insists she is feeling good Down Under and is determined to finish off the job with just one more victory needed to reach the Grand Slam.
"I was still very nervous but I controlled it a lot better," she said.
"I knew what I wanted to do in the match. I've played Stephanie a lot of times and they've been long, tough matches.
"I knew it was going to be difficult so I focused more on me and what I wanted to do on the court, and ended up playing really, really well. I was very happy with my serve, my returns, groundstrokes, just everything.
"That's how I want to play. I came in with a different approach. It was nice to get through the first match but now I'm feeling better I want to hit the shots that I've been practicing."
While there was joy for Watson compatriot Johanna Konta failed to join her in the final qualifying round as the number three seed lost 6-1 6-2 to Olga Savchuk.
Meanwhile, the Brits already qualified for the Australian Open now know who they will face after the draw was revealed.
Andy Murray, seeded fourth, will face off against Japan's Go Soeda first up, having never played the world number 112 before, and could have to beat Roger Federer and Rafael Nadal en route to the final.
British women's number one Laura Robson will play Wimbledon semi-finalist Kirsten Flipkens in her first round match.
The pair have never faced each other before but Robson, who made the third round of last year's tournament, is currently nursing a wrist injury and is not yet certain to take up her place in the draw although she has been practising in Melbourne.