D.A. Points, who won the Northeast Pennsylvania Classic earlier this season, posted a 7-under 65 and is alone in second place at the Pete Dye Golf Club.
D.J. Trahan, who lost to Watney in the first round of the 2000 U.S. Amateur Championship, carded a 6-under-par 66 on Thursday. Trahan is tied for third place with Darron Stiles, Nick Cassini, Bryce Molder and Ned Michaels.
Watney broke into red figures with a chip-in birdie at the third hole. He added pair of birdies from inside 10 feet at eight and nine to make the turn at 3-under 33.
Watney knocked a 3-wood to 6 feet to set up an eagle at the par-5 11th. He ran home an 8-footer for birdie at the 14th, then holed a 10-foot birdie putt at the next hole.
The 23-year-old from California capped off his round with a tap-in birdie at the 17th. At the closing hole, Watney played a 9-iron to 20 feet and drained the putt to take the two-shot edge.
'I had a good day,' said Watney, who was ranked No. 1 in the country while at Fresno State University. 'It was a nice finish. I'm getting more comfortable out here. I'm learning how to play the game.'
Watney's 63 on Thursday was his lowest round on the Nationwide Tour. He hit 10 out of 14 fairways, 16 of 18 greens in regulation and needed only 28 putts in his opening round.
'I did everything well today,' said Watney. 'I hit it well and putted well. I've been putting well for a few weeks now. I've been playing pretty good and it was a lot of fun.'
Points started on the back nine Thursday and tallied three birdies. He sank a 10-foot birdie putt on the first, then collected three birdies in his last five holes to take sole possession of second place.
'To get off to a good start is real important to me,' said Points, who took second the week before his win at the Northeast Pennsylvania Classic. 'As arrogant as it may sound, today felt really comfortable. There is so much golf to play.'
James Driscoll is alone in eighth at minus-5, followed by Tom Scherrer, Brett Wetterich, Greg Bruckner, Craig Lile, Jeff Freeman, Patrick Damron and Warren Schutte. That group came in at 4-under-par 68.