Watson, the world number 75, converted three of her four break points but had her own serve broken six times as she lost in one hour and 27 minutes to the fifth seed.
Heather Watson defeat came at the end of a busy summerReuters
The Briton had opened up a 2-0 lead following an early break in the first set.
However, a double fault then cost Watson her next service game before former world number one Wozniacki broke again to lead 3-2.
The Dane went on to close out the first set in 35 minutes following another break.
Wozniacki continued her momentum into the second set, breaking Watson’s first service game to move 2-0 ahead.
Watson produced a recovery to immediately break back and hold to level, only to then trail again at 4-2 after losing a lengthy sixth game which saw eight deuces.
The Briton rallied again to immediately break Wozniacki at 4-3, but then failed to hold.
Wozniacki, the world number 22, went on to serve for the match, closing out victory in one hour and 27 minutes.
