Loch Watten is the largest body of water in Caithness. The name of the village and loch appear to come from the Old Norse Vatn, meaning water, and the loch is famous for its brown trout fishing.
A military camp was built in Watten during World War II, in early 1943, and at the end of the war this became POW Camp 165. This had been described as "Britain's most secretive prisoner of war camp" because many prominent Nazis were moved there from POW Camp 21 at Comrie in Perthshire . These prisoners included Gunter d'Alquen, Himmler's chief propagandist, leading U-boat captain Otto Kretschmer, dubbed the "Wolf of the Atlantic", and SS-Sturmbannführer Max Wünsche, one of Hitler's top aides. The camp closed in 1948.
Watten was the birth place of Alexander Bain, inventor of the electric clock and the fax machine.