Watchem is a rural town on the Sunraysia Highway and the railway line to Mildura, north-west Victoria. It is 30 km north-west of Donald and 20 km south of Birchip.
The name is thought to be derived from an Aboriginal word meaning a place where the hop bush (Dodonaea) grows. (Compare Watchupga – a word describing the hop bush.)
The first farm selections in the Watchem area occurred in 1873 and a town survey was made in 1875. At that time, however, the railway had not reached Donald, and it was in 1893 that the line was extended beyond Donald to Watchem and Birchip. A Catholic school was opened in 1893 and a government school in 1895. The Victorian municipal directory for 1893 also recorded a hotel, store and church at Watchem, which was described as a rising township.
By the early 1900s there was a progress association which undertook tree planting to ameliorate westerly weather conditions
The progress association later raised funds for street lighting, and local self help built a bowling club and greens (1957). Further self help in 1991 had the general store rebuilt with community financial contributions and labour donated by local tradespeople.
Watchem was the only significant settlement in addition to Donald in the former Donald Shire. It has a public hall, a swimming pool (1967), a recreation reserve, Anglican and Uniting churches, a hotel and a general store. The Catholic church, the oldest in the Birchip district, closed in 2009. The school had 16 pupils in 1998 and was closed in 2000.