Watson appeared to injure his left calf playing for New South Wales against Queensland on Saturday and had been a doubt for the test which begins on Friday at the Gabba in Brisbane.
Left-handed opener Rob Quiney will make his debut for Australia against South Africa in the first test from Friday in place of Watson.
Quiney, the 30-year-old Victorian, is a late bloomer who graduated to first class cricket only five years ago.
Opener Quiney comes into the three-test series in good form after scoring 85 for Australia A against South Africa last week. He will become Australia's 429th test cricketer.