After graduating from Brown University, Waterman moved in 1857 to New York where he remained for twenty years, keeping a studio in the New York University Building. Some sources state that he was entirely self-taught, but others record that he studied with or at least was influenced by Thomas Hill and William Morris Hunt. It is known that he had brief academic training as a student in the life class at the National Academy in 1858-59. He began participating in the annual exhibitions at the Academy in 1858 and continued to do so as long as he lived in the city. Early on, he decided to specialize in the painting of landscapes and most of his works shown at the Academy were of that genre.
In 1874, Waterman accompanied Hunt and a group of artist on a sketching trip along the Massachusetts coast, an experience that encouraged him to make his home in Boston for a time. While maintaining a studio in that city, he took a number of European excursions during the 1880s and 1890s. He was especially inspired by the terrains of Holland, France, southern Spain, and northern Africa. Meanwhile, he continued to paint the landscapes of America with a special preference for the mountains of Vermont and the beaches of Cape Cod. During the first decade of this century, he moved with his wife to her native Italy where he died.
He was a member of the Paint and Clay Club in Boston and of the American Water-Color Society and the Artists Fund Society.