Both men had won Olympic gold medals, but it was the youthful energy of the 28-year-old Joshua which proved decisive as Mr Povetkin visibly tired halfway through the contest.
In front of about 80,000 fans, Mr Joshua moved on to 22 fights unbeaten in his professional career by handing the 39-year-old Mr Povetkin only his second defeat.
Mr Joshua, returning to the arena where he knocked out Ukrainian Wladimir Klitschko in April, 2017 to become a unified heavyweight world champion, was given a hero’s reception by the almost capacity crowd.
However, early on it was the smaller challenger who appeared the more inspired by the occasion and he caught the Briton late in the first round with an uppercut on the nose.
Both men had won Olympic gold medals, but it was the youthful energy of the 28-year-old Mr Joshua which proved decisive as Mr Povetkin visibly tired halfway through the contest.
Mr Joshua began dictating with his movement from the fourth round and started to find his range with his right hook.
That was what did for Mr Povetkin, the WBA mandatory challenger, in the seventh when a fearsome right-hander from Mr Joshua landed square on his jaw and sent the Russian to the canvas.
He got back to his feet but not for long as a flurry of punches from the champion gave him his 21st win by knockout.
“Povetkin is a very tough challenger, he proved that tonight with good left hooks and counter punches,” Joshua said from inside in the ring.
“I came in here to have fun, and give it my best, I knew he was strong to the head but weak to the body. I was just mixing it up.
“It could have been seven, maybe nine, maybe 12 rounds to get him out of there. But the ultimate aim was to be victorious.
“I got my knockout streak back.”