Williams’ seemingly inexorable march towards a calendar grand slam was almost halted in its tracks by the British No 1.
Watson broke Williams three times in the final set and was serving for the match before the American clawed her way back to win 6-2, 4-6, 7-5 and set up a last-16 tussle with sister Venus.
It was a remarkable match, prompting Andy Murray to urge fellow Twitter users to show their support for the Guernsey player.
“Retweet if @HeatherWatson92 just made you feel really effing proud!” declared Murray. “Favourite if she made you feel really effing proud!”
An almost-tearful Williams left Centre Court admitting Watson “should have won the match”.
“She was playing so good there was nothing I could do,” Williams told the BBC. “She played unbelievable and really I think she should have won the match. She was up two breaks [in the final set]. She really gave her all.”
Williams, of course, is a modern great and is still in line to land all four major trophies in the same season. She believes Watson must now aim for the very top.
When asked if the world No 59 can crack the top 20, Williams said: “Absolutely, even beyond the top 20. She’s playing really well. I think she should set her goals higher because she can definitely do better.”
Watson will be left to rue breaking Williams’ serve three times in a compelling final set, only to lose out once the 33-year-old recalibrated after a patchy performance.
Williams has plenty of form for dramatic antics in any case, rallying from a set down for victory four times en route to this year’s French Open crown.
Even in the Roland Garros final, Williams dropped the first two games of the final set against Lucie Safarova, but still hit back, claiming six games in a row for her 20th grand slam triumph.
Watson touched the very fringes of one of the great Wimbledon upsets but still fell in the end – and that after Williams had blasted to the opening set in just 25 minutes.
It is 36 years since a British woman last beat a world No 1, when Sue Barker beat Chris Evert in Boston in 1979. Murray, meanwhile, will be back in action today when he makes his first Centre Court appearance of this year’s Championships. The Scot will take on Andreas Seppi of Italy, the 25th seed. James Ward, the only other surviving Briton in the singles, faces Vasek Pospisil of Canada on No 1 Court.