He replaces the injured Ollie Hassell-Collins on the left wing in the only change from the England team who beat Italy two weeks ago.
Former captain Courtney Lawes and Ben Curry are named on the bench, along with livewire winger Henry Arundell.
It will be the classy Watson’s first start since the Six Nations in 2021, the year he also appeared twice for the British & Irish Lions against South Africa.
He made a late replacement appearance in the opening game against Scotland earlier this month but was not involved versus Italy.
Watson, who turns 29 on Sunday, missed almost a year with a knee injury but kick-started his career after moving from Bath to Leicester this season.
"I was fortunate to be part of the coaching team here a few years ago when Anthony was playing so well and then he had a couple of setbacks," Borthwick told reporters.
"Then I signed him in club rugby and from the day we walked in he was magnificent. His professionalism, the way he prepared himself, the way he helped the younger players, how much he cares as a professional.
"He adds to the mix in those outside backs where we are starting to build competition for places and depth."
Curry was called up earlier in the week after his brother Tom was ruled out of the rest of the championship with a hamstring strain. He too played in the first game before being dropped for the Italy match.
Lawes has played only a handful of games for his club Northampton after a succession of concussion and injury issues and last featured for England in Australia last July.
"Courtney has worked really hard to come back from injury, potentially sooner than many people forecast and has been incredibly diligent," Borthwick said of the flanker/lock.
"We want a competitive squad so that we have depth in each position and Courtney certainly adds to that. His quality and experience have contributed to a focused training week, marked by the sort intensity we expect."
England have lost on their last three visits to Cardiff, including a 2019 World Cup warm-up, though Wales have had a dire start to the championship with heavy defeats by Ireland and Scotland.
Borthwick, a master of detail, unsurprisingly said he had prepared as usual in expectation of the game going ahead but did not dismiss his rivals' concerns that forced Wales boss Warren Gatland to delay naming his team for two days and cancel Wednesday's training.
"I and everybody with the England team have incredible sympathy for what the Welsh players have gone through," he said. "No player, no professional athlete should have to deal with that level of uncertainty and anxiety.
"We really sympathise with them but, from our point of view, we've focused on the game and being the best-prepared team we possibly can be. Other stuff we can't control, so we just concentrate on what we can do.
"We know the Principality Stadium crowd will be in full voice and we will have to be at our very best to repeat the success we had in the last round against Italy."
England team:
15. Freddie Steward, 14. Max Malins, 13. Henry Slade, 12. Ollie Lawrence, 11. Anthony Watson, 10. Owen Farrell (Captain), 9. Jack van Poortvliet; 1. Ellis Genge, 2. Jamie George, 3. Kyle Sinckler, 4. Maro Itoje, 5. Ollie Chessum, 6. Lewis Ludlam, 7. Jack Willis, 8. Alex Dombrandt
Replacements: 16. Jack Walker, 17. Mako Vunipola, 18. Dan Cole, 19. Courtney Lawes, 20. Ben Curry, 21. Alex Mitchell, 22. Marcus Smith, 23. Henry Arundell
Nine changes for Wales
Wales have wielded the axe with nine changes to their side for the Six Nations showdown on Saturday, including a start for Owen Williams ahead of Dan Biggar at flyhalf as coach Warren Gatland desperately seeks a winning formula.
The match had been under threat this week as Welsh players mulled strike action following a dispute over contracts for next season, but was given the green light on Wednesday with the squad having resumed training.
It will be a first international start for Williams at flyhalf having previously played centre as Gatland also called on the cavalry with the return of a number of senior players, including number eight Taulupe Faletau, loose-forward Justin Tipuric, lock Alun Wyn Jones and fullback Leigh Halfpenny.
There is also a debut for Mason Grady at outside centre as he partners another rookie in Joe Hawkins as the midfield pairing. George North is not in the match 23.
Halfpenny earns a first start in almost two years having been named and then withdrawn due to injury a number of times in recent months, while fit-again wing Louis Rees-Zammit is back in the starting team in the place of Rio Dyer. Josh Adams is the other wing.
Gareth Thomas and Tomas Francis pack down at prop either side of hooker and captain Ken Owens, while Adam Beard joins Jones in the second row and Christ Tshiunza keeps his place from the 35-7 loss to Scotland last time out to form a back row with Tipuric and Faletau.
"There’s some experience coming back into the side and then we’re mixing that with giving players an opportunity. Owen Williams coming in at 10 – we need to find out about that 10 position so Owen gets a chance," Gatland said in a media release from Welsh Rugby.
"We’ve given Mason Grady a first cap. He’s a big lad, he’s got some really lovely rugby skills and offloading ability. He’s quick, so he’s the kind of centre that I think is going to have it all going forward."
Wales have had two heavy defeats in the Six Nations so far with the Scotland defeat preceded by a 34-10 home loss to Ireland.
Wales team:
15. Leigh Halfpenny, 14. Louis Rees-Zammit, 13. Mason Grady, 12. Joe Hawkins, 11. Josh Adams, 10. Owen Williams, 9. Tomos Williams; 1. Gareth Thomas, 2. Ken Owens, 3. Tomas Francis, 4. Adam Beard, 5. Alun Wyn Jones, 6. Christ Tshiunza, 7. Justin Tipuric, 8. Taulupe Faletau.
Replacements: 16. Bradley Roberts, 17. Rhys Carre, 18. Dillon Lewis, 19. Dafydd Jenkins, 20. Tommy Reffell, 21. Kieran Hardy, 22. Dan Biggar, 23. Nick Tompkins.
