Watt left the field and entered the Texans' blue medical tent halfway through the second frame before retreating to the locker room. Houston initially announced the defensive lineman was questionable to return before later ruling him out at the beginning of the third quarter.
Before leaving the game, Watt recorded three tackles, a tackle for a loss and a pass breakup. He has four sacks this season.
League sources told NFL Media that Watt's injury could potentially cost him the remainder of this season. Watt is believed to have suffered a torn pectoral muscle, which would end his 2019-20 campaign.
Texans cornerback Lonnie Johnson was also knocked out of Sunday's matchup with a concussion. Houston was already without starting cornerbacks Johnathan Joseph and Bradley Roby entering its Week 8 contest.
The Texans beat the Raiders 27-24 to improve their record to 5-3 this season.