Waterman's acting career began in childhood. His first role was in Night Train for Inverness (1960). He appeared in two small stage roles for the Royal Shakespeare Company's 1960 season. In 1961, at the age of 13, he played the part of Winthrop Paroo in the Adelphi Theatre production of The Music Man. A year later, he starred as William Brown in the BBC TV series William based on the Just William books of Richmal Crompton. Waterman played the rôle of Oliver Twist in the production of the Lionel Bart musical Oliver! staged at the Mermaid Theatre, London, in the early 1960s, and appears on the cast recording released in 1961. Waterman was a series regular in the 1962 CBS comedy Fair Exchange, playing teenage son Neville Finch. Waterman was in the original cast of Saved, the play written by Edward Bond, and first produced at the Royal Court Theatre in November 1965. He had a major rôle in the film Up The Junction (1967) his character Peter, played the boyfriend of Polly played by actress Suzy Kendall in the star studded cast of this landmark film.