Fans took to Twitter to express their delight that the actress was back as Fanny Brice at the Savoy Theatre.
The actress had been out of the show for almost two months due to stress and exhaustion.
Her part had been taken over by understudy Natasha J Barnes to great acclaim.
"If she's still tired and frayed, she showed not a jot of fatigue for two hours on Saturday night," wrote the Telegraph's theatre critic Dominic Cavendish after seeing Smith's performance.
He said her return had been "greeted by protracted applause from the audience at the start and a standing ovation at the end - a tsunami of affection which she gamely took in her stride, beaming, and jabbing a thumbs-up in thanks".
Audience members tweeted that Smith got an "ecstatic" reception and that the cast received a "much-deserved standing ovation".
Fellow cast member Matthew Goodgame tweeted that it had been an "honour" to play the role of Nick opposite Smith.
The producers announced Smith's return as she took to the stage on Friday night.
"We are delighted to welcome Sheridan Smith back to Funny Girl this evening," said a statement.
"It is currently planned that Sheridan will also play this Saturday evening (not matinee), and Monday to Saturday next week (excluding the Wednesday matinee and Thursday evening performances at which Natasha J Barnes will perform).
"From the week commencing 18 July, Sheridan is scheduled to perform Tuesday through Saturday, with Natasha playing Fanny Brice on Monday evenings. This schedule is subject to change, but we look forward to continuing to entertain audiences at the Savoy Theatre until our run ends on 8 October."
When Smith took time off from the role in May the producers said she would get "the rest and support she needs".
The actress has two Olivier awards for her stage roles in Legally Blonde and Flare Path, was made an OBE last year and has described the part of Fanny as her "dream role".
The production of Funny Girl transferred to the Savoy Theatre in April after a successful run at the Menier Chocolate Factory.
Sheridan Smith received standing ovations over the weekend as she returned to her leading role in West End show Funny Girl.