The pair connected for scores on each of the Wildcats' first three drives and Kansas State (8-5) rolled to its first bowl win in 11 years, breaking an 0-5 skid.
Waters completed 21-of-27 passes for 271 yards without an interception and also ran 12 times for 42 yards.
Lockett finished with 10 grabs for 116 yards as KSU racked up 420 yards of total offense.
Shane Morris, subbing for injured starter Devin Gardner (left foot), made good on 24-of-38 passes for 196 yards with a interception for the Wolverines (7-6).
Morris also rushed for 43 yards on four carries.
Jeremy Gallon led Michigan's receiving corps with nine catches for 89 yards.