The 65-year-old was said to be "deeply upset" at the loss of the valuable timepiece, which was taken in Tower Place, near Leith Docks, at around 10.40pm last night.
The victim was grabbed from behind by one man who held on to him, while a second man demanded he hand over his personal possessions.
The men searched him for valuables before making off with his watch, which fell to the ground during the assault.
Both men then made off along Tower Street towards the Malmaison Hotel and were lost to sight.
The victim was uninjured and reported the incident to police.
Officers are now eager to speak to anyone who was in the area or witnessed anything suspicious.
The suspects are both described as white, in their 20s, around 5ft 10ins tall with thin builds. They were wearing dark tops, dark jeans and dark trainers and spoke with local accents.
The stolen watch was a Gold Baume and Mercier with a white and yellow Gold bracelet and Black face and is valued at 2000.
A police spokesman said: "Fortunately the victim did not suffer any injuries, however, he is deeply upset at having had a valuable watch stolen from him.
"Anyone who was in or around Tower Street and witnessed the incident or recognises the description of the suspects is asked to contact police immediately.
"Similarly, anyone with information that can assist with our enquiries should also come forward."
Anyone with any information should contact Lothian and Borders Police on 0131 311 3131, or Crimestoppers in confidence and complete anonymity on 0800 555 111.