Watmore was cruising on a speedboat off the coast of Barbados with girlfriend Sophie when their vessel was struck by a speeding catamaran.
The impact knocked the 23-year-old and his partner overboard along with three elderly passengers.
Heroic Watmore managed to grab onto the travellers before coastguards rushed out to assist the sinking group.
Not content with saving the others from drowning, he then used his t-shirt to stop the bleeding after one of the passengers suffered a severe leg cut.
Watmore was out on a fishing trip while staying at the Colony Club on the island.
One of the rescued passenger told the Sun : “It was scary, life or death. I’m lucky not to be coming back in a box.
“We assumed [the catamaran] would see us and change course, but it then got closer.
“Duncan helped everybody to get on to the boat — he couldn’t have been nicer.”
Watmore was ruled out of the rest of this season in December after he suffered a knee cruciate ligament injury.
To help his recovery, Black Cats boss David Moyes ordered the England under 21 ace to go away on holiday.