England international Smith, making his first appearance since the British and Irish Lions tour, ran in Quins' opening try and directed the aerial assault that ended the visitors' perfect league record this season.
The 26-year-old playmaker also landed two conversions, the second after Tyrone Green's second-half touchdown, and two penalties to shade his duel with former England captain Owen Farrell, who pulled the strings for Saracens at inside centre.
Farrell created tries for Fergus Burke and Ben Earl with a sublime offload and pinpoint crossfield kick, but it was not enough to stop his side suffering their third successive defeat by Harlequins.
Burke's superb try in the 26th minute ensured Saracens trailed only 10-7 at half-time at The Stoop.
But the home side extended their lead to 10 points moments into the second half when Green went over and Smith converted.
The north London club conjured their second try in the 63rd minute, with Farrell executing an exquisite crossfield kick for Earl to score. Farrell's conversion reduced the deficit to 17-14.
Quins spent the closing minutes in enemy territory, closing out the game when Smith slotted his second penalty on the stroke of full-time, just moments before he was named player of the match.
"We had to fight tooth and nail for that result," said Smith. "Just spending some time in the 22 in front of our friends and family was amazing.
"To get that result in the end means the world to us."
Saracens started the season with two bonus-point wins but defeat on Sunday leaves them third in the English top flight, four points behind leaders Bath.
Harlequins are eighth in the 10-team division, with one win in three games.
"We haven't started (the season) the way we wanted," said Smith. "We're fighting as hard as we can and competing as hard as we can and our aim is to try and get better week on week. We'll be all right."