Istanbul police interrupted a live CNN International broadcast on Saturday and briefly held Watson, the news broadcaster's long-time Istanbul correspondent. He was reporting on the first anniversary of Turkey's biggest anti-government protests in decades.
Erdogan has repeatedly accused the foreign media and governments of having a hand in the protests, which have erupted sporadically but with far fewer numbers since last June. He also blames an international conspiracy for a graft scandal that implicated his inner circle in December.
Saturday's demonstrations were muted, with a heavy police presence at Taksim Square, where last year's protests began, to prevent any unrest. They fired tear gas and water cannon to disperse 1,000 or so protesters.
"The international media that came to Istanbul and made exaggerated, provocative calls were licking their paws. One of them was that CNN flunky," Erdogan told members of his AK Party in parliament in a speech aired live by several channels.
"He was caught red-handed. These people have nothing to with a free, impartial, independent press. These people are literally executing their duties as agents. That's why they are here."
Erdogan recalled Atlanta, Georgia-based CNN's hours-long live coverage of the 2013 protests in Istanbul's central Taksim Square and said it was aimed at fomenting unrest.
At the time, hundreds of thousands of people occupied Taksim for two weeks to protest against the government, following plans by Erdogan to raze a park in Istanbul to make space for a mall.
"We stand unequivocally by our reporting from Turkey, which has been and continues to be fair, factual and impartial," a CNN spokesperson said.
In Washington, U.S. State Department spokeswoman Marie Harf called the accusation that Watson was serving as an agent "ridiculous" and defended CNN as "independent and nonbiased".
"Look, we strongly support freedom of the press in Turkey, including Ivan Watson from CNN being able to report, and have continued to raise our concerns," Harf told a media briefing.
On Saturday, police shoved and kicked Watson, then dragged him off camera while he spoke during a live broadcast from Taksim. Watson is seen showing his Turkish press accreditation.
"Turkish police detained me and my crew in the middle of a live report in Taksim Square. One officer kneed me in the butt," Watson tweeted on Saturday.
"Turkish police released CNN team after half an hour. Officer apologized for another officer who kneed me while I was being detained," he tweeted 30 minutes later.
An government official said on Saturday the prime minister's office had phoned Watson to inquire about his situation to ensure he was safe and said he was only held for a few minutes because he was not carrying his passport.
Groups including the Committee to Protect Journalists, and Human Rights Watch have expressed worries about the climate for journalists in Turkey.