It was the 14th time the 65-year-old Watson has been turned down for parole, the Los Angeles Times reported. He'll get another chance in five years.
Relatives of his victims requested the parole panel not release him, the newspaper said.
Watson, who was the self-described right-hand man of cult leader Charles Manson, is imprisoned at Mule Creek State Prison in Ione for killing pregnant actress Sharon Tate and four others at her Beverly Hills home on Aug. 9, 1969, and helping kill grocery owners Leno and Rosemary LaBianca the next night.
Watson is serving life after his death sentence was overturned.
The Times said Watson has married and divorced and fathered four children while in prison. He also became an ordained minister and started a prison ministry.