Grigg, a Northern Ireland international, started his professional career at the Banks's Stadium in 2008 and had his most impressive season last year as he found the net 20 times.
Out of contract in the summer, Walsall offered Grigg a lucrative contract to stay with the club but he eventually opted to join League One rivals Brentford - a move which disappointed Smith, who felt the 22-year-old was of Championship quality should he not be able to convince him to pen a new deal.
A compensation package could not be agreed, with the tribunal set to come next week - just days after the two sides go head-to-head at Griffin Park.
Smith told Walsall's official website: "Saturday's game will see us come up against a familiar face in Will Grigg.
"I am proud of the way that this club has developed Will. He had a choice to make during the summer and I hope that he goes on to enjoy a successful career in the game.
"Of course, at the weekend he becomes an opposition player and we will be looking to deal with the threats that he and his team-mates possess."