The cream of the world's classical music talent gathered at London's Albert Hall for the awards.
Watson beat off competition from Italian opera singer Cecilia Bartoli for his second best-album award for Encore, the only honour voted for by radio listeners.
He also picked up an award for the biggest selling classical album in the UK.
Bartoli won for female artist of the year but missed out on the critics' award.
Italian tenor Andrea Bocelli, in London for his first British performance this year, was honoured for his outstanding contribution to music.
The third year of the Classical Brits saw performances from Watson, the Opera Babes, Bocelli and Czech mezzo-soprano Magdalena Kozena.
Virtuoso beaten
The contemporary music award was won by Tan Dun, responsible for the haunting strings of Crouching Tiger, Hidden Dragon.
The composer beat off competition from Howard Shore, who scored the Tolkien epic Lord of the Rings, and Hans Zimmer.
Violin virtuoso Chloe Hanslip was beaten to young British classical performer of the year by former young musician of the year, Guy Johnston.
Male artist of the year went to Sir Colin Davis for LSO Live, while the LSO and Richard Hickox also won best ensemble/orchestra album.
The LSO and Davis also won the critics award for Berlioz, Les Troyens.
The winners are decided by a panel made up of media figures, record dealers, the Musicians Union, industry executives and orchestra leaders.
The only "people's award" is album of the year, voted for Classic FM listeners, while journalists and pundits vote on the critics award.
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