The 35m strike after the final hooter ensured the Dunedin-based franchise finished their pre-season with a win, having previously lost to the Crusaders and been bundled out in the Brisbane Tens quarterfinals.
Smith's late strike also ensured the Highlanders didn't throw away a game they had led 40-18 early in the second half, only for the Waratahs to come steaming back to lead 47-40 inside the final 10 minutes.
But midfielder Rob Thompson crashed over under the sticks with a few minutes left on the clock, before Smith snatched the game with his right-boot.
Earlier, Highlanders co-captain Ben Smith bagged two of his team's seven tries to help the Highlanders to a 33-18 lead at halftime.
Highlanders coach Tony Brown made wholesale changes at the break, which coincided with the Waratahs storming back into the match.
There was an injury concern for the visitors, after No 8 Luke Whitelock went down with a shoulder injury in the first half.
However, it's unknown how serious it is.
The Highlanders open their Super Rugby campaign against the Chiefs in Dunedin next Friday night.
Photo: Dianne Manson/ Getty Images (Fletcher Smith lines up a kick for Otago in the 2016 Mitre 10 Cup).