Customs officials staged the destruction Monday to highlight law enforcement's role in protecting intellectual property rights.
Immigration and Customs Enforcement officials say the watches were seized from Binh Cam Tran, who pleaded guilty last year to charges including trafficking in counterfeit goods.
Tran is serving six years in federal prison. He has been ordered to pay more than $2.2 million to the Rolex Co.
Authorities say Tran fabricated hundreds of thousands of fake Rolex watches in his home near Philadelphia. Officials seized about 24,000 counterfeit watches and enough parts to create 1 million more.