The pair, who will be part of the British & Irish Lions squad for this summer’s tour to South Africa, make their return to the team for the match at BT Murrayfield.
Rory Sutherland, the third Edinburgh player selected for Warren Gatland’s squad, is still recovering from a shoulder injury.
Edinburgh’s decision contrasts with Glasgow Warriors who have rested their two Lions, Ali Price and Zander Fagerson, for Friday night’s match against Leinster.
Watson and van der Merwe’s Scotland team-mates Jamie Ritchie and Ben Toolis also return to the team.
It will be the capital club’s last match as a permanent resident at the stadium before moving into their new ground on the back pitches at Murrayfield.
“We’re pleased to welcome the return of some quality, experienced players alongside some exciting young talent for our final match at BT Murrayfield,” said Richard Cockerill, the Edinburgh head coach.
“It’s been no secret we’ve missed a number of players throughout this campaign so to see them back is a real boost for this weekend, and also as we look ahead to a full pre-season in preparation for life in our new home.”
Ritchie will captain the side just four days after being named national team skipper for the Scotland’s summer tour, while Watson will make his first appearance since being named in the Lions squad after recovering from a groin issue.
There are 10 changes in total from the side which lost to Glasgow last month, with three of the club’s teenage FOSROC Academy prospects handed opportunities from the outset – debutant and full-back Harry Paterson (19), hooker Patrick Harrison (18) and No 8 Ben Muncaster (19).
Paterson’s ismaking his debut for the club and his selection at 15 sees Blair Kinghorn move to stand-off where he will partner scrum-half Charlie Shiel.
Edinburgh team (v Ulster, Rainbow Cup, BT Murrayfield, Saturday, 5.15pm)
15. Harry Paterson
14. Eroni Sau
13. James Johnstone
12. George Taylor
10. Blair Kinghorn
9. Charlie Shiel
1. Boan Venter
2. Patrick Harrison
3. WP Nel
4. Marshall Sykes
5. Ben Toolis
6. Jamie Ritchie (c)
8. Ben Muncaster
16. Mike Willemse
17. Pierre Schoeman
18. Simon Berghan
19. Mesu Kunavula
20. Harri Morris
21. Henry Pyrgos
22. Nathan Chamberlain
23. Cammy Hutchison