In front of an electric, finals-like crowd of 84,234, the Tigers went down 13.13 (91) to 9.8 (62).
Essendon had to hang on without Michael Hurley in the second half, with the key forward substituted out at the main break after he rolled his left ankle late in the second quarter.
Hurley, who briefly returned to the ground in an attempt to play on, sat out the second half nursing the same ankle that sidelined him for the Anzac Day clash against Collingwood one month ago.
It was a significant win for the 7-2 Bombers, who had lost back-to-back matches against Geelong and the Brisbane Lions but are now firmly entrenched in the top four.
Richmond, which now has its spot in the top eight under threat at 5-4, was left to ponder another loss on the big stage against top opposition.
Watson was brilliant for the victors, finishing with 28 possessions and three goals in a best-on-ground performance.
David Zaharakis (18 and two) and Brent Stanton (38 and one) were also at the forefront for the Bombers, while half-back Michael Hibberd (29 and one) continued his strong season.
Heath Hocking was deployed to Richmond game-breaker Brett Deledio and kept the dangerous Tiger to 17 touches.
The Bombers, who won the midfield battled convincingly, made their break in the second term after a careful start that saw both teams determined to hang on to possession.
Zaharakis kick-started a run of five unanswered goals, converting twice from long range, while Watson pushed forward and tormented the Tigers.
The Bombers' tackling pressure was frenetic and by half time they converted their defensive efforts into scoreboard pressure, taking 20-point lead into the main break.
The Tigers attempted to spark their midfield early in the third term by injecting substitute Matt White into the game for tall forward Ty Vickery, but it was to no avail.
With Brandon Ellis, who had 39 possessions last week, withdrawn pre-game with hamstring soreness, the Richmond midfield was already handicapped and there were few winners in the yellow and black.
Alex Rance and Troy Chaplin battled hard in defence, while Shaun Grigg ran all night to finish with 27 disposals.
RICHMOND 2.2 4.5 6.5 9.8 (62)
ESSENDON 2.3 7.7 11.9 13.13 (91)
GOALS
Richmond: Riewoldt 2, Cotchin, Edwards, King, Martin, McGuane, Nahas, Vlastuin
Essendon: Crameri 3, Watson 3, Zaharakis 2, Hibberd, Howlett, Melksham, Stanton, Winderlich
BEST
Richmond: Rance, Grigg, Chaplin, Vlastuin, Newman, Jackson
Essendon: Watson, Zaharakis, Stanton, Goddard, Hibberd, Hocking, Carlisle
INJURIES
Richmond: Ellis (hamstring) replaced in selected side by Nahas
Essendon: Hurley (ankle)
SUBSTITUTES
Richmond: Matt White replaced Tyrone Vickery in the third quarter
Essendon: Jake Melksham replaced Michael Hurley in the third quarter
Reports: Nil
Umpires: Donlon, Rosebury, Findlay
Official crowd: 84, 234 at the MCG
