England captain Steph Houghton joined ex-stars Powell and Marieanne Spacey in an 'All Star XI', managed by Smith.
Former World Cup final referee Howard Webb officiated the game, won 4-2 by the current Gunners side.
A crowd of 2,351 watched the match at Boreham Wood FC.
Smith, who scored 46 international goals in 117 appearances for England, did not play in the game, having recently announced she is pregnant.
But England's record goalscorer did add another to her tally, coming on to net a late penalty.
Powell, who was Smith's England boss at six major tournaments, told BBC Sport: "I enjoyed the warm-up more than the game! My body isn't used to it anymore, but it was a good run-out.
"It was a really good turnout for Kelly and that is fantastic. She was a bit emotional, which was understandable.
"It was a lot of fun, with banter in the changing rooms and, for her, a really special day."
Former England manager Hope Powell was among those to pay tribute to Kelly Smith in a match celebrating the retiring Arsenal Ladies legend's career on Sunday.