Dwarf habit is one of the most important traits in crop plant architecture, as it can increase plant density and improved land utilization, especially for protected cultivation, as well as increasing lodging resistance and economic yield. At least four dwarf genes have been identified in watermelon, but none of them has been cloned. In the current study, the Cldw-1 gene was primary-mapped onto watermelon chromosome 9 by next-generation sequencing-aided bulked-segregant analysis (BSA-seq) of F2 plants derived from a cross between a normal-height line, WT4, and a dwarf line, WM102, in watermelon. The candidate region identified by BSA-seq was subsequently validated and confirmed by linkage analysis using 30 simple sequence repeat (SSR) markers in an F2 population of 124 plants. The Cldw-1 gene was further fine-mapped by chromosome walking in a large F2 population of 1,053 plants and was delimited into a candidate region of 107.00 kb. Six genes were predicted to be in the candidate region, and only one gene, Cla010337, was identified to have two single nucleotide polymorphisms (SNPs) and a single nucleotide deletion in the exons in the dwarf line, WM102. A derived cleaved amplified polymorphic sequence (dCAPS) marker was developed from the single nucleotide deletion, co-segregated with the dwarf trait in both the F2 population and a germplasm collection of 165 accessions. Cla010337 encoded an ATP-binding cassette transporter (ABC transporter) protein, and the expression levels of Cla010337 were significantly reduced in all the tissues tested in the dwarf line, WM102. The results of this study will be useful in achieving a better understanding of the molecular mechanism of the dwarf plant trait in watermelon and for the development of marker-assisted selection (MAS) for new dwarf cultivars.