In a thrilling finale, Herbert closed with a day's best four-under-par 67 to deny Smith a drought-breaking triumph after 15 months without a victory for the 2022 British Open champion.
Born two hours down the road across the Victorian border in Bendigo, Herbert prevailed with a 15-under 269 total in front of a posse of family and friends at Murray Downs Golf and Country Club, near Swan Hill.
After starting Sunday four shots behind Smith, Herbert wound up winning by two strokes after the third-round leader disappointed with a closing three-over 74.
After backing up his tie for third at the Queensland PGA Championship with a runner-up showing, Smith continues to trend nicely ahead of his crack at a fourth Australian PGA crown next week at Royal Queensland.
But the former world No.2 will lament letting the Kel Nagle Cup slip from his grasp and having to settle for a share of the runner-up spoils with unheralded NSW pair Corey Lamb and 41-year-old Alexander Simpson.
After opening the marquee $800,000 event with a course-record 64, Smith appeared in control after wrestling back the halfway lead from Herbert on Saturday.
But with two bogeys and no birdies in his first eight holes, Smith watched his overnight four-stroke buffer over Herbert disappear before he even reached the turn on Sunday.
The pre-tournament favourite briefly regained the lead with his first birdie on the ninth.
But there was no denying Herbert.
Two months after combining with his Ripper GC skipper to claim LIV's 2024 teams' title in Dallas, Herbert won on his own for the first time since March last year in Hong Kong on the DP World Tour.
And it largely came down to his putting and the decision to revert to the trusty blade he ditched on Saturday and couldn't drop one.
The 28-year-old drained five birdies on championship Sunday, compared to Smith's two.
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