Watchmen was first mentioned publicly in the 1985 Amazing Heroes Preview. When Moore and Gibbons turned in the first issue of their series to DC, Gibbons recalled, "What really clinched it ... was [writer/artist] Howard Chaykin, who doesn't give praise lightly, and who came up and said, 'Dave what you've done on Watchmen is fuckin' A.'" Speaking in 1986, Moore said, "DC backed us all the way ... and have been really supportive about even the most graphic excesses." To promote the series, DC Comics released a limited-edition badge ("button") display card set, featuring characters and images from the series. Ten thousand sets of the four badges, including a replica of the blood-stained smiley face badge worn by the Comedian in the story, were released and sold. Mayfair Games introduced a Watchmen module for its DC Heroes Role-playing Game series that was released before the series concluded. The module, which was endorsed by Moore, adds details to the series' backstory by portraying events that occurred in 1966.
Watchmen was published in single-issue form over the course of 1986 and 1987. The limited series was a commercial success, and its sales helped DC Comics briefly overtake its competitor Marvel Comics in the comic book direct market. The series' publishing schedule ran into delays because it was scheduled with three issues completed instead of the six editor Len Wein believed were necessary. Further delays were caused when later issues each took more than a month to complete. One contemporaneous report noted that although DC solicited issue #12 for publication in April 1987, it became apparent "it won't debut until July or August".
After the series concluded, the individual issues were collected and sold in trade paperback form. Along with Frank Miller's 1986 Batman: The Dark Knight Returns miniseries, Watchmen was marketed as a "graphic novel", a term that allowed DC and other publishers to sell similar comic book collections in a way that associated them with novels and dissociated them from comics. As a result of the publicity given to the books like the Watchmen trade in 1987, bookstore and public libraries began to devote special shelves to them. Subsequently, new comics series were commissioned on the basis of reprinting them in a collected form for these markets.
Watchmen received critical praise, both inside and outside of the comics industry. Time magazine, which noted that the series was "by common assent the best of breed" of the new wave of comics published at the time, praised Watchmen as "a superlative feat of imagination, combining sci-fi, political satire, knowing evocations of comics past and bold reworkings of current graphic formats into a dysutopian [sic] mystery story." In 1988, Watchmen received a Hugo Award in the Other Forms category.
Disagreements about the ownership of the story ultimately led Moore to sever ties with DC Comics. Not wanting to work under a work for hire arrangement, Moore and Gibbons had a reversion clause in their contract for Watchmen. Speaking at the 1985 San Diego Comic-Con, Moore said, "The way it works, if I understand it, is that DC owns it for the time they're publishing it, and then it reverts to Dave and me, so we can make all the money from the Slurpee cups." For Watchmen, Moore and Gibbons received eight percent of the series' earnings. Moore explained in 1986 that his understanding was that when "DC have not used the characters for a year, they're ours." Both Moore and Gibbons said DC paid them "a substantial amount of money" to retain the rights. Moore added, "So basically they're not ours, but if DC is working with the characters in our interests then they might as well be. On the other hand, if the characters have outlived their natural life span and DC doesn't want to do anything with them, then after a year we've got them and we can do what we want with them, which I'm perfectly happy with."
Moore said he left DC in 1989 due to the language in his contracts for Watchmen and his V for Vendetta series with artist David Lloyd. Moore felt the reversion clauses were ultimately meaningless, because DC did not intend to let the publications go out of print. He told The New York Times in 2006, "I said, 'Fair enough,' [...] 'You have managed to successfully swindle me, and so I will never work for you again.'" In 2000, Moore publicly distanced himself from DC's plans for a 15th anniversary Watchmen hardcover release as well as a proposed line of action figures from DC Direct. While DC wanted to mend its relationship with the writer, Moore felt the company was not treating him fairly in regards to his America's Best Comics imprint (launched under the WildStorm comic imprint, which was bought by DC in 1998; Moore was promised no direct interference by DC as part of the arrangement). Moore added, "As far as I'm concerned, the 15th anniversary of Watchmen is purely a 15th Anniversary of when DC managed to take the Watchmen property from me and Dave [Gibbons]." Soon afterward, DC Direct cancelled the Watchmen action-figure line, despite the company having displayed prototypes at the 2000 San Diego Comic-Con International.