Multi world and national champion Powell raced off against the USA's Shawn Morelli for the gold medal after both rode blistering times in qualifying.
The gold medalist in the C4 IP at London posted the fastest time with 4:01.964 and broke her own Paralympic record from 2012. But Morelli came along and smashed it with a 3:57.741 and another new Paralympic record for the day.
Both slowed in the final, Morelli's 3:59.407 enough to claim gold over the Canberran's 4:04.794.
Other Aussies in action included Matt Formston and partner Nick Yallouris along with Kieran Modra and David Edwards in the tandem pursuit. All rode valiantly but unfortunately did not qualify for the finals.
With an impressive career and lots of medals in the cupboard, Powell says Rio is her swansong.
There's nothin' like a dame
Dame Sarah Storey won gold in the women's C5 3000m IP after overlapping fellow Brit, Crystal Lane in the gold medal final after only 1,375 metres. The race therefore stopped and Storey won without a time over 3000m.
Storey broke the world record in qualifying with 3:31.394.
This gold is Storey's 12th and earned her the title of Great Britain's most successful female paralympian.
Aussies in action on 7TWO tonight:
- Jess Gallagher and Maddie Janssen in the women's tandem 1000m Time Trial 11pm AEST (medals on offer)
- David Nicholas in the men's C3 3000m at 1.15am AEST