Watson-Scott will manage O&M's production activities across broadcast media.
The move reunites her with O&M's executive creative director, Malcolm Poynton. The pair worked together at M&C Saatchi following Watson-Scott's appointment as its head of TV in 1996.
Watson-Scott launched her career as a TV producer for PKL before Foote Cone Belding offered her the chance to work on big-budget shoots.
It was there that she worked with a host of famous directors, including Alan Parker and Ridley Scott, whom she married.
After a brief spell at Collett Dickenson Pearce and later KMP, she formed her own production company in 1985, Lewin and Watson, with the director Nick Lewin.
Over the company's ten-year existence, the pair were responsible for launching the directing duo Vaughan Arnell and Anthea Benton, whose credits include Levi's "creek".
At M&C, Watson-Scott earned recognition for commissioning ads including the Ivan Zacharias-directed Whiskas "insights" and the "Johnny Foreigner" spot starring PJ O'Rourke, for British Airways.
Watson-Scott said: "I'm delighted to be reunited with Malcolm at a time when the agency is really going places and creativity is at the heart of its agenda."
Poynton said: "This is an important step in the restructuring of our broadcast production and the role will see Sandy actively involved with our clients.
"Her wealth of experience running both her own production company and TV agency departments is a rare combination indeed, and will be of huge benefit to the agency and clients alike."