Watson and Andy Murray initially missed out on the 16-team mixed doubles tournament because their combined ranking was too low but were given a place just 45 minutes before their first-round match after Romanians Florin Mergea and Monica Niculescu withdrew.
They took full advantage, with Watson particularly impressive in a 6-3 6-3 win over David Ferrer and Carla Suarez Navarro of Spain.
Watson, who lost in the second round of the singles, said: "I had a flight tonight. I genuinely had all my stuff packed, I brought it here, I came here just in case. I had no idea, wasn't sure if we'd get in and then just got told, 'Get your kit on, you're on'."
The 24-year-old was devastated to be overlooked as Murray's partner at London 2012 in favour of Laura Robson, with the pair going on to win silver.
Watson and Murray have played together since at the Hopman Cup in Australia while the Guernsey player proved her mixed doubles credentials with a surprise Wimbledon title alongside Finn Henri Kontinen last month.
She said: "I'm glad to be back on the court with Andy. I thought we played well tonight. It's tough, it was really windy but I really enjoyed it.
"Wimbledon has given me confidence, especially on the doubles court. I think I'm playing better now than I was last time I played with Andy at the Hopman Cup so it's all positive.
"I really do enjoy mixed doubles I enjoy the variety and trying to return the guy's serves, all of it."
If Murray and Watson can maintain the form they showed against Ferrer and Suarez Navarro they certainly have a chance of a medal.
Next up in the quarter-finals is a clash with fourth seeds Rohan Bopanna and Sania Mirza of India.
Murray, who now faces having to play two matches a day if he is to go all the way in singles and doubles, is optimistic about their hopes.
He said: "We've played pretty well in mixed . Heather won the mixed at Wimbledon so obviously plays extremely good mixed doubles. I think if we play like that we'll give ourselves chances in all of the matches. It was a good start."