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Newcastle Knights were handed their first loss of the NRL season after a Melbourne Storm masterclass led by Cameron Smith.

Melbourne master coach Craig Bellamy taught his former apprentice another lesson on Saturday night,when the Storm handed Adam O'Brien's Newcastle side their first NRL loss of the season.

O'Brien, a Storm life member, faced his former team for the first time as a head coach but came away with a harsh reality check for his previously undefeated Knights.

In typical Storm fashion, skipper Cameron Smith pulled the strings in the 26-12 victory in Gosford, ratcheting up pressure on the Knights, who eventually crumbled.

Smith set up two of the three first-half tries as Melbourne took an 18-2 lead into the sheds, but it could have been more if not for some defensive resilience from the Knights.

"He was outstanding. They ran hard and our contact wasn't great so if you're not getting any positive marker work with your defence Cameron Smith is going to have a good night," O'Brien said post-match.

"If we don't get our contact right Cameron is going to do what Cameron does."

Despite a brave rally from Newcastle in the second half, their poor completion rate in the first 40 minutes was too much to overcome at the back end of the game.

"They were hungrier than us at the start of the game, we dipped a toe. The first try was evident in that, our lack of urgency to get back there to bat it dead," O'Brien said.

"We haven't been like that, we've scrapped for everything and fought hard.

"We fought hard in the second half, but we got beaten to the punch straight away by a team that was running harder, playing the ball quicker and sticking their contact a lot hard than what we were."

The Knights briefly threatened, scoring two tries in six minutes through Bradman Best and Edrick Lee to get within a converted try with 20 minutes on the clock.

However, with the Storm on the attack, Knights enforcer David Klemmer was controversially pinged for a late shot on lock Dale Finucane in front of the posts.

Smith easily nailed the penalty from in front to give Storm a 20-12 lead which took the wind out of the Knights' sails with six minutes remaining.

"I'm not going to blame the referees, I'm not that coach, but Klem can't disappear," O'Brien said of the call.

A try to Brandon Smith sealed the win for Melbourne in the dying stages when he burrowed over from close to the line.

It was the fourth win of the season for the Storm who take on Penrith in Sydney on Friday, while Newcastle host Brisbane on the Central Coast a night earlier.