Mrs Smith, who had previously spent a combined 24 years at Feilding and Geraldine High Schools, was interviewed for her new role last week and informed the board of trustees of her intention to leave at an extraordinary meeting last Friday.
She spent yesterday morning telling staff and pupil leadership of her decision, before relating the news to the remaining pupils at an assembly.
She was philosophical and somewhat emotional about the decision in her office yesterday morning.
"The intention is that I will start at Fiordland College at the start of term two, which begins in April," she said.
"I've been here for five years and I think this is a new challenge, but it's also around my own personal kind of terms in that Te Anau is a place my husband and I really love."
The assembly had been difficult, she said.
"I told the girls because I didn't want someone else telling them. The girls were probably pretty stunned.
"I told them how much I love this place and how hard it is to say goodbye to them.
"It was quite difficult actually, probably one of the hardest things I've had to do in my time as principal."
She believed she was leaving both the pupils and the school in good shape, and that the school easily had the resources to manage until a replacement principal was found.
"They are stunning girls - I make no bones about that. This is a really amazing school. Whoever comes in and takes over from me will have a wonderful time.
"I'll miss the girls, I'll miss the people - it's definitely about the people."
The vacated position of principal will be advertised in the Education Gazette, with the successful applicant likely to start at the beginning of term three.
The faculty's senior leadership group, comprising deputy and assistant principals, will run the school during term two.
Mrs Smith said she was proud of the school's progress in her time at the helm.
Building developments had made possible huge advancements in science and technology, information technology and food and fabric technology, with a tender for the school's library having been called.
Huge changes to the curriculum, a changed school timetable, additional training in professional development of staff and increased emphasis on cultural pursuits, along with a large painting project yet to take in the junior school, were all given as examples of key initiatives instituted in her time in charge.
Board of Trustees chairman Michael Sandri was happy for Mrs Smith, but said it would be difficult to let her go after the pair had worked so closely and she had done a "fantastic" job.
"We've had five years of growth and change and I think it's all been positive," Mr Sandri said.
"The student leaders were upset to say the least.
"It's going to be really sad for us as a community. The girls love her, the staff love her; she's just a great person."
