Anna Nicole Smith and Howard K. Stern were reportedly staying in the Bahamas to avoid paternity testing of her daughter in the United States. In late 2006, Smith was granted permanent resident status in the Bahamas by Immigration Minister Shane Gibson. On February 11, 2007, newspaper photographs were published showing Smith lying clothed in bed in an embrace with Gibson.[dead link] Opposition politicians in the Bahamas accused the minister of improper behavior. Gibson resigned as a result of the controversy and claimed that the photos, taken by Stern, were innocent.[dead link]

The basis of Smith's permanent residency status was the claim that she owned a $900,000 mansion, which she said was given to her by a former boyfriend, real estate developer G. Ben Thompson of South Carolina. Thompson asserted that he loaned Smith the finances to purchase the property, but that she failed to repay the loan, and was attempting to regain control of the property. Thompson sued to evict Smith from the property in Bahama Court, and received a default judgment against her when she failed to respond to the eviction, or appear in court on November 28, 2006. Ford Shelley, son-in-law of G. Ben Thompson, claimed that methadone was found in Anna's bedroom refrigerator while the mansion was being reclaimed. A photograph provided by TMZ shows a large bottle of methadone along with vials of injectable cyanocobalamin in her refrigerator.

On February 8, 2007, Smith was found unresponsive in room 607 at the Seminole Hard Rock Hotel and Casino in Hollywood, Florida. Tasma Brighthaupt, a friend of Smith who was a trained emergency nurse, performed CPR for 15 minutes until her husband, Maurice "Big Moe" Brighthaupt, Smith's friend and bodyguard, took over CPR. He had frantically driven back to the hotel after being notified by his wife of Smith's condition. According to Seminole Police Chief Charlie Tiger, at 1:38 p.m. (18:38 UTC) Maurice Brighthaupt, who was also a trained paramedic, called the hotel front desk from her sixth-floor room. The front desk in turn called security, who then called 911. At 1:45 p.m. the bodyguard administered CPR until paramedics arrived and she was rushed to Memorial Regional Hospital at 2:10 p.m and pronounced dead on arrival at 2:49 p.m.

A phone call was released to the public on February 13, 2007, involving Seminole police and the local 911 operators, saying:

After a seven-week investigation led by Broward County Medical Examiner and Forensic Pathologist Dr. Joshua Perper in combination with the Seminole police and several independent forensic pathologists and toxicologists, Dr. Perper announced that Smith died of "combined drug intoxication" with the sleeping medication chloral hydrate as the "major component." No illegal drugs were found in her system. The official report states that her death was not considered to be due to homicide, suicide, or natural causes. The full investigative report has been made public and can be found online. Additionally, an official copy of the autopsy report was publicly released on March 26, 2007, and can be found online.

Ultimately her death was ruled an accidental drug overdose of the sedative chloral hydrate that became increasingly lethal when combined with other prescription drugs in her system, specifically 4 benzodiazepines: Klonopin (Clonazepam), Ativan (Lorazepam), Serax (Oxazepam), and Valium (Diazepam). Furthermore, she had taken Benadryl (Diphenhydramine) and Topamax (Topiramate), an anticonvulsant GABA agonist, which likely contributed to the sedative effect of chloral hydrate and the benzodiazepines. Although the individual levels of any of the benzodiazepines in her system would not have been sufficient to cause death, their combination with a high dose of chloral hydrate led to her overdose. The autopsy report indicates that chloral hydrate was the "toxic/lethal" drug, but it is difficult to know if chloral hydrate ingestion alone would have killed her, since Dr. Perper indicated (in the March 26 press conference) that she had built up a tolerance to the drug and took more than the average person. He indicated that she took about 3 tablespoons, whereas the normal dosage is between 1 and 2 teaspoons. Chloral hydrate, first synthesized in 1832, was the first depressant developed for the specific purpose of inducing sleep. The infamous “Mickey Finn” or “knockout drops” was a solution of alcohol and chloral hydrate that was popular in Victorian England and in that era’s literature. When used properly, and without the introduction of alcohol or other depressants, chloral hydrate is effective in easing sleeplessness due to pain or insomnia. But according to Avis (1990), the effective dose and lethal dose of chloral hydrate are so close that the sedative should be considered dangerous. Today, the use of chloral hydrate has declined as other agents, including barbiturates and benzodiazepines, have largely replaced them. Despite rumors of methadone use due to its involvement in her son's death, Dr. Perper found only methadone in her bile, indicating that it could only have been ingested 2–3 days prior to her death and was not a contributing factor. The autopsy report indicates that abscesses on her buttocks (presumably from prior injections of vitamin B12 (cyanocobalamin) and human-growth hormone), and viral enteritis were contributory causes of death. Tests for influenza A and B were negative.

It was reported that 8 of the 11 drugs in Smith's system, including the chloral hydrate, were prescribed to Howard K. Stern, not Smith. Additionally, two of the prescriptions were written for Alex Katz and one was written for Smith's friend and psychiatrist, Dr. Khristine Eroshevitz. Dr. Perper acknowledged that all 11 prescriptions were written by Dr. Eroshevitz herself.

Before Smith's body was buried, it began decomposing at a faster-than-normal pace. The drugs found in Anna Nicole's body in the autopsy, the fact that the legal battles delayed her embalming until over a week after her death, and the nearly month-long wait for her burial in the warm Bahama weather, were cited as possible factors in her more rapid decomposition. This resulted in the family having a closed-casket funeral.

Smith's will, drawn up in April 2001, named her son Daniel as the sole beneficiary of her estate, specifically excluded other children, and named Howard K. Stern as the executor. It indicated personal property valued at $10,000 and real property valued at $1.8 million (with a $1.1 million mortgage) at the time of death. A petition to probate Smith's will was filed in Los Angeles County Superior Court. The petition to probate lists Larry Birkhead as a party with interest to Anna's estate. A six-foot-tall black granite monument was installed at Smith's grave in the Bahamas, as of February 2009.