The 20-year-old lost 6-3 6-1 to the Pole, meaning that she has yet to get beyond the third round stage of a Grand Slam.
Radwanska also sent Watson crashing out at SW19 last year for the concession of just two games.
However, the British number one said that her performance in Melbourne today was a marked improvement.
"I thought I had a good start to the match," BBC Sport quotes Watson as saying. "I had chances early on to break but I wasn't able to convert, and I think after that game that I didn't convert it kind of just slipped away a little bit.
"That's what makes Radwanska so good. She's always there every game, so you can't have a second because she will just take the next few points. I feel like I did a lot better this time than last time, and the score doesn't really show how I felt out there. I felt like I was in it and it was a lot closer."
Radwanska now faces Ana Ivanovic in round four.