Watson, who scored an impressive 30-ball 51 runs, played an instrumental role to lead Australia’s run chase as he hit three sixes and five boundaries.
Chasing a 124-run target, Australia reached the target in 15.1 overs with 29 balls to spare as Cameron White and George Bailey remained unbeaten on 22 and 6 runs respectively.
Australia lost Michael Hussey (10) and David Warner in their run-through to their victory against Ireland.
Warner scored 26 and was dismissed when was caught on the leg side after putting up an impressive 60-run opening partnership with Watson.
Warner and Watson got the Aussies off to a flying start in their run chase as the Aussies reached the 50-run mark in the sixth over.
After a great bowling display by Watson, who grabbed three wickets as fired-up Australia restricted Ireland to 123-7, the Aussie stalwart punished the Irish bowlers with a series of 4s and 6s.
Warner on the other hand looked immaculate with his aggressive batting display to torment the Irish bowlers as he became the third batsman to reach 1000 runs in T20 international cricket.
Kevin O’Brien top-scored for Ireland with 35, adding 52 for the fifth wicket with elder brother Niall (20) after Ireland had slipped to 33-4 by the eighth over.
Australia, who had briefly slipped below Ireland in the T20 rankings earlier this month, looked determined to teach the non-Test nation a cricketing lesson in the first ever T20 clash between the two sides.
The slump started with the first ball of the innings, which skipper William Porterfield hooked down fine-leg’s throat to the great delight of bowler Watson.
In-form batsman Paul Stirling was caught at third man off Mitchell Starc and Ed Joyce holed out to mid-off against Glenn Maxwell after making 16.
Left-arm spinner Brag Hogg, the oldest player in the tournament at 41, struck with his second delivery when he trapped Gary Wilson leg-before for five.
The O’Brien brothers boosted the total with their partnership, before both fell in the space of four balls from Watson.
The West Indies are the third team in the group, from which two will qualify for the Super Eights round.