Watson was “reluctantly coming forward out of a strong sense of civic duty and her belief that those seeking or serving in public office should be of the highest character,” the law firm representing her said in a statement.
Fairfax is next in line to succeed the state’s embattled governor, Ralph Northam, who has been urged to step down in the face of a scandal arising from a racist graduation photo shoot.
Fairfax’s firs accuser, California university professor Vanessa Tyson, released a statement recently alleging that he had forced himself on her sexually in a hotel room during the 2004 Democratic National Convention.
Fairfax has acknowledged knowing his accuser but repeated his assertion on Wednesday that their encounter was consensual.
In a written statement, the 39-year-old man unequivocally denied both Tyson's and Watson's accusations.
"I deny this latest unsubstantiated allegation. It is demonstrably false. I have never forced myself on anyone ever," Fairfax said.
He demanded "a full investigation into” the allegations, saying, "a vicious and coordinated smear campaign is being orchestrated against” him.
"I have passed two full field background checks by the FBI and run for office in two highly contested elections with nothing like this being raised before," he added. "I will not resign."
In a tweeted message on Friday, former Virginia Gov. Terry McAuliffe called on him to step down.
The new allegation comes at the time when the current political crisis in Virginia has deepened after its third-ranking elected official, Attorney General Mark Herring, admitted to wearing blackface in the 1980s at a college party.
Herring said in a statement on Wednesday that he donned brown face paint and a wig at a party in 1980 to impersonate a rapper.