Edwards (40) has won the world indoor title for the past two years and Smith was the World Bowls singles champion in 2008.
They won the pairs together in Christchurch in 2008.
Edwards (40) won the game 21-17 with aggressive play on the last few ends but it could easily have gone the other way.
''I was never sure I had it,'' Edwards said. ''I was playing against a world-class bowler and my best mate.''
Edwards led 20-17 before the last end and looked to be in hot water when
Smith held four shots before she drove at the jack with her last bowl.
''I was game down and just looking to stay in the game,'' Edwards admitted.
''It was a good result for me but pretty scary.''
The end was killed and had to be replayed.
This time Smith had two shots tucked close to the jack when Edwards' last bowl draw leaned on Smith's shot bowl and won the game.
''I thought I'd drawn the shot with my third bowl but it caught a wind gust and went too far,'' she said.
The pair played for the same club in Nelson for 15 years before Edwards shifted to Christchurch five years ago.
They have played against each other many times but have never kept the score of wins and losses.
Smith dominated the early ends and led 10-4 after eight ends.
''I was getting frustrated by the wind,'' Edwards said. ''I had to take a mental pause and realise that a bowl a couple of feet away from the jack could be a very good one.''
Smith agreed.
''It was just so hard out there. A lot of the time it was just a case of who got there first,'' she said.
''The cross-winds were tricky and blew both ways. It was hard to pick. The wind kept gusting from side to side. It was hard to play with any confidence.''
Smith still held the upper hand when she led 13-8 after 12 ends.
The next four ends changed the game when Edwards picked up eight shots to draw level at 16-16.
She completed the win by scoring one, three and one on the last three ends.
