The match was initially played at a quick pace, with Anderson coming out firing to take the first set, but then conceding the second without winning a leg.
Anderson then took the third set in a handful of minutes, before both athletes struggled in the fourth. Wattimena had a chance to close it out when he approached the board with 60 remaining, but after pinning 20 a second time in error, he then missed a dart at double 10 to level things up.
The Scot stepped up and only needed two darts to close out 44 and give himself a 3-1 lead. But then came the comeback.
Wattimena went into a 2-0 lead in the fifth set, before Anderson fought back to give himself a chance to win the match. However, he missed darts at double 16 and double eight to open the door for Wattimena to go up and win the set and make it 3-2 - an opportunity he duly took.
Anderson again missed match darts in the sixth set - bringing his total of missed oppurtinities to four - to set up a winner-takes-all seventh set.
Wattimena fought hard in the seventh, even taking it to three-all in the final set to ensure the winner would need to win by two legs, but Anderson won on his throw before breaking with a close of double tops to ensure he is still alive in his quest to win a third world title.
"It's not good for my age," Anderson said. "I went 3-1 up and missed darts at double then Jermaine went on a roll.
"It's hard but what a game.
"The last two games were boring. I'm going to go and lie down now."
Earlier in the day Rob Cross had beaten Damon Heta 4-0 to set up a showdown with defending champion Luke Littler in the next round, while Ryan Searle beat Martin Schindler by the same scoreline in the first match of the day.
"Luke Litter is the best player in the world at the minute for a reason," said Cross. "I think he was always daring to dream because he's always been that good.
"I won't worry. I'm going to play darts and if I can get a little bit of magic out of myself, then who knows."