The game was played in a persistent rain.
Seattle (7-6) moved back into second place in the AFC West and trails the New York Jets (8-5) by one game in the battle for the third and final wild card spot.
Watters, who returned to action in last Sunday's loss at Denver, was named the starter over Shaun Alexander by coach Mike Holmgren during the week despite tallying just 23 yards on six carries last week.
"It felt great to finally be able to play," Watters said. "When the rain started, I had a feeling the ball would be in my hands more. I'm glad that I'm finally able to contribute to the team on the field."
"I think he did a fine job," Holmgren said. "He gained over 100 yards rushing and he caught the ball well. He played like I expected him to play and was a big part of the win."
The 10-year veteran opened the scoring 4:43 into the game, diving into the end zone for his fifth rushing touchdown in eight games against Dallas (4-9). It was the 91st of his career, tying him with former Cowoy and Hall-of-Famer Tony Dorsett for 17th on the all-time list.
"When you can score early, it puts pressure on their offense," Seahawks quarterback Matt Hasselbeck said. "We stalled a bit but we got things going in the second half and the defense did the rest."
The Seahawks improved to 15-1 since 1997 when they have a running back rush for at least 100 yards.
It was the first time Dallas receiver Joey Galloway had returned to Seattle since he was traded by the Seahawks to the Cowboys following the 1999 season for a pair of first-round picks. Galloway asked for the trade after sitting out eight games due to a contract dispute.
The seventh-year receiver, who was booed by the crowd throughout the game, had seven catches for 82 yards, but embraced Holmgren at the end of the game.
"The weirdest thing was looking at the guys I used to play with," Galloway said. "I wasn't really prepared for what that feeling would be like.
"I didn't hear the boos until the end of the game when it was out of reach."
After the Cowboys were stopped on their first possession, the Seahawks added to their lead with 2:58 left in the first on a 22-yard field goal by Rian Lindell before Micah Knorr answered with a 37-yard field goal, making it 10-3.
The two teams exchanged punts back and forth the remainder of the second quarter as well as the third before Seattle punter Jeff Feagles booted a 58-yard punt to the Dallas eight, where Reggie Swinton fielded it and Seattle linebacker Tim Terry knocked it loose into the end zone.
Cowboys linebacker Jamal Brooks kicked it out of bounds for a safety, extending the Seahawks lead to 12-3.
Seattle got the ball after a free kick and drove 11 plays and 37 yards, ending with a 37-yard field goal by Lindell with 13:10 left in the game.
The defense once again forced the Cowboys to punt and Seattle capitalized when Alexander ran one yard to his left into the end zone untouched for a touchdown with just under seven minutes to play.
Alexander had just seven carries for 27 yards.
"(Alexander) has been very positive throughout this week and the whole season," Watters said. "Everyone on this team is helping to pick each other up instead of pulling each other down."
The Seahawks put the finishing touches when cornerback Ike Charlton picked off a pass intended for Galloway and returned the interception 68 yards for a touchdown.
On Dallas' first play following the touchdown by Alexander, rookie quarterback Quincy Carter threw a pass to Galloway, but Charlton stepped in front of the receiver at the Cowboys' 38 and went the distance.
"We had them in a spot where they had to throw," Charlton said. "(Carter) looked at Joey the whole way. I made a break for the ball and made the play."
Carter was 11 of 29 for 117 yards and an interception.
"The weather wasn't a factor," Carter said. "I just didn't make the plays."
Hasselbeck was 13 of 24 for 151 yards as Seattle won its fifth game at home in the last six.