The distressing scenes, which include the fatal blow, have been shown with the agreement of Mr Watson's family.
In what police call a "highly unusual move", the film has been shown on BBC One's Crimewatch UK in a fresh bid to catch Greg Watson's killers.
The distressing scenes, which include the fatal blow, have been shown with the agreement of Mr Watson's family.
Scotland Yard say the footage caught on a nearby CCTV camera shows the vicious and unprovoked nature of the attack.
They hope it will touch the conscience of anyone with information who has not yet come forward.
Detective Chief Inspector Guy Ferguson, who is leading the investigation, said: "I have not taken the decision to release this CCTV footage lightly and sincerely hope that the horrific nature of this attack will prompt people to come forward, particularly those who may have been reluctant to help the police.
"Greg's family have expressed their full confidence in this investigation and believe that the identity of Greg's killer is being concealed."
Mr Watson, father of a month-old baby girl called Amber, was murdered as he made his way home to Northolt from the Carnival on Bank Holiday Monday 28 August.
He was with a group of younger relatives and friends when, at about 2200 BST, a gang of youths tried to accost his young female cousin.
As others in the group intervened Mr Watson attempted to calm the situation - but was then stabbed.
His attacker fled in the direction of Ladbroke Grove as police, who saw the incident unfold on CCTV, arrived on the scene.
Paramedics treated Mr Watson but he died from his injuries soon afterwards at St Mary's Hospital.
A £10,000 reward has been offered by police for information which leads to the arrest and conviction of the killer.
Mr Watson's death came hours after the murder of 28-year-old Asian graduate Abdul Bhatti, who was set on by a group of youths in what police believe was a racially motivated attack.
The murders - alongside 11 stabbings and 132 robberies - contributed to a 27% rise in crime at this year's carnival.
Metropolitan Police Commissioner Sir John Stevens said the "extreme and unacceptable levels of crime" meant a review of the event's location was now necessary.
Although the CCTV images of the attack on Mr Watson are not good quality, DCI Ferguson said he was confident people would be able to recognise the knifeman and his friend.
"We also know that this pair were pestering young women at carnival prior to this attack and its very likely that these women still have no idea that they could give us vital information."
Police are also appealing for anyone on or following a float making its way up Kensal Road at the time of the attack to come forward.
The suspect is black, around 5'8" to 5'10", in his late teens to early 20s and of muscular build.
He has short hair which was shaved at the sides and longer on top and was wearing a black hooded top and dark trousers.
The suspect's friend who initially accosted Mr Watson's group is black but lighter skinned, of similar age and slimmer.
He was wearing a black vest, and a green shirt which he wore open.
DCI Ferguson continued: "I'm confident that there are people out there who know the identify of Greg's killer and I ask them to search their consciences and come forward with that information, for the sake of Greg's family."
Anyone with information is asked to call the Westminster incident room on 020 7321 7228 or contact Crimestoppers anonymously on 0800 555111.
Crimewatch UK was broadcast on BBC One at 2130 BST on Wednesday