Watervale is a town on the Horrocks Highway in the Clare Valley, South Australia, approximately 9 kilometres north of Auburn and 15 kilometres south of Clare. It is surrounded by a number of small wineries and several B&Bs. The Riesling Trail runs past the town to the west, between the Highway and the Skilly Hills. The town has a number of 19th century heritage buildings, including the former Stanley Grammar School, which is now a private residence.