Waugh made 211 from 392 balls with 21 boundaries and one six as New South Wales scored 544 for eight declared in their first innings of the Australian interstate four-day match.
The 37-year-old, who is yet to decide if he will make himself available for Australia's West Indies Test tour in April, had little to say about his playing future.
"I felt really relaxed and I'm hitting the ball the best I have in a long time," Waugh told reporters on Thursday.
Victoria, who are second on the table, one place above New South Wales, were 132 without loss in reply at the close of the second day's play of the four-day game at Melbourne Cricket Ground.
Wicketkeeper Brad Haddin, who made 117 from just 139 balls, put on 167 for the sixth wicket with Waugh after New South Wales had resumed at 279 for four with Waugh on 125.
Waugh, who batted for eight-and-a-half hours, was dropped on four by debutant David Hussey at first slip on Wednesday. The veteran made his 19th century in Australia interstate four-day matches after coming to the crease with the score on nought for two wickets on a seaming pitch.
Waugh, who captained Australia to their 1999 World Cup final victory over Pakistan, was dropped from the national one-day side a year ago.
The New South Wales skipper was bowled by Victoria's left-arm paceman Mathew Inness on Thursday when five runs short of his highest score in interstate matches of 216 not out against Western Australia in 1990-91.
His good recent form also includes 104 in an interstate one-day match against Tasmania in Sydney on Sunday.
Officials abandoned Tasmania's match at Bellerive Oval in Hobart against Western Australia after the lunch break of the second day's play on Thursday because of concerns over the state of the wicket. Paceman Brad Williams repeatedly struck Tasmania batsmen with sharply rising deliveries during the first session.
Williams took 5-48 in Tasmania's 179. Western Australia had reached 52 for three in reply.
Competition leaders Queensland lost by an innings and 125 runs to South Australia on the third day of their match at Adelaide Oval. South Australia had scored 464 then dismissed the visitors for 118 and 221 including 94 from opener Clinton Perren.
