Mr Watson will stand down at the end of May having pursued three public sector careers.
A former teacher and later director of education for Tayside Regional Council, Mr Watson was also employed as chief executive for both Tayside Regional and Angus councils.
Mr Watson said he was "privileged" to have served the health board.
He said: "I salute the hard work that staff undertake day in, day out and the way in which they have risen to the challenges of transforming services to make them better for patients, their families and carers."
Mr Watson, who was appointed an OBE in 2003 and Deputy Lieutenant for Angus in 2007, said he had been convinced to apply for the chairmanship of the board by then health and wellbeing secretary Nicola Sturgeon.
The chairman of NHS Tayside is to retire after almost 50 years of work in the public sector.