World number three McIlroy is attempting to complete a career Grand Slam by adding The Masters to his four other Major triumphs this week.
Watson, a two-time winner at Augusta, believes that McIlroy will thrive in fast conditions with his high ball flight and become the first European since Jose Maria Olazabal in 1999 to win the year's first Major.
"He's my pick this week," Watson told reporters. "Rory can emasculate a golf course. He hits the ball high and so far.
"And I can tell you the golf course is different this year than it was last year. The greens are faster... on Tuesday they had a real sheen to them."
Watson, 66, is playing in his last Masters this week.