Screenshots published by British tabloid The Sun showed revealing images of women in underwear posted on his personal Instagram account.
The West Australian reported that a hacker also posted racial slurs and fat-shaming comments to his Twitter account last week.
The 38-year-old, who has more than two million followers across the two platforms, apologised to his followers for the posts.
"My apologies to everyone for the illicit photos that have been posted on my Instagram account," he tweeted.
"First my Twitter account on Friday got hacked and now Instagram today."
He also recorded a separate video, uploaded to Instagram, in which he slammed the content as "disgraceful".
Watson played 59 Tests and 190 One Day International matches for Australia before retiring from international cricket in 2016.