Watson was born in the village of Fingal, Ontario Canada. His family relocated to Ann Arbor, Michigan in 1850. At age 15 he was matriculated at the University of Michigan, where he studied the classical languages. He graduated with a BA in 1857 and received a master's degree on examination after two years' study in astronomy under professor Franz Brünnow. He became Professor of Physics and instructor in Mathematics, and in 1863, succeeded him as professor of Astronomy and director of the Detroit Observatory. He wrote the textbook , published in 1868 by J. B. Lippincott & Co. The textbook was a standard reference work for over thirty years. He discovered 22 asteroids, beginning with 79 Eurynome in 1863. One of his asteroid discoveries, 139 Juewa was made in Beijing when Watson was there to observe the 1874 transit of Venus. The name Juewa was chosen by Chinese officials. Another was 121 Hermione in 1872, from Ann Arbor, Michigan, and this asteroid was found to have a small asteroid moon in 2002. He was a member of the most important expeditions for astronomical observation sent out by the United States Government during his time. The first was an expedition to observe the eclipse of the Sun at Mount Pleasant, Iowa, in 1869; the second of a similar expedition to Sicily, in 1870; the third to Beijing, China, to observe the transit of Venus in 1874; the fourth to Wyoming, to observe the total eclipse of the sun in 1878. He was a strong believer in the existence of the planet Vulcan, a hypothetical planet closer to the Sun than Mercury, which is now known not to exist. He believed he had seen such two such planets during his observation of the 1878 solar eclipse. In 1879, after attempts by the university to retain him, Watson resigned his professorship at Ann Arbor to accept a position the University of Wisconsin, where he hoped to find superior apparatus and instruments for the difficult observations which he had planned. Seeking to silence critics who doubted his claims to have discovered Vulcan, he also personally paid to construct an underground observatory, in a misguided attempt to observe planets in the daytime. This was based on the idea that stars could be seen during the day from the bottom of a well, which is an ancient myth but verifiably incorrect. Watson died of peritonitis at the age of 42 and was buried at Forest Hill, Ann Arbor. He had amassed a considerable fortune through non-astronomical business activities and, by bequest, established the James Craig Watson Medal, awarded every two years by the National Academy of Sciences for contributions to astronomy. His successor, Edward Holden, completed Watson's underground observatory, but declared it useless after he found not even the brightest stars could be observed.