The tourists were again undone by Pakistan's spin bowlers, with Sajid Khan and Noman Ali seeing England all out for 112, their lowest ever total in Pakistan.
England started 24-3 with Harry Brook and Joe Root at the crease, with the pair starting confidently before the former was caught by Mohammad Rizwan from Noman's delivery.
Ben Stokes (three) and Jamie Smith (three) followed shortly after, with Root then edging from another Noman delivery to all but England's slim hopes of a victory.
The tourists lost seven wickets for just 46 runs, with Noman (6-42) and Sajid (4-69) claiming all 10 dismissals in the second innings, with Pakistan set a target of just 36 to win.
Jack Leach was able to grab the early wicket of Saim Ayub (eight), but Shan Masood (23) and Abdullah Shafique (five) steered the hosts to a memorable victory.
England's next Test series starts in New Zealand at the end of November, while an almost entirely different squad begins a white-ball series in the West Indies next week.
Data Debrief: Pakistan end home hoodoo
Having been beaten in six consecutive Tests and winless in 11 at home, Pakistan earned a memorable victory on home soil, spearheaded by Noman and Sajid.
Sajid rightly picked up the Player of the Series award, taking 19 wickets which included two five-wicket hauls, while also scoring 72 runs with the bat.
But Noman also played his part in the triumph. Along with Sajid, the pair took 39 of the 40 wickets in the final two Tests against England.
Powell smashed six fours and four sixes in a 34-ball 64 that propelled Peshawar Zalmi to 197-5 from their 20 overs.
The final score was testament to a remarkable recovery after Mohammad Amir had dismissed Mohammad Haris and Babar Azam for ducks in the opening first over and Saim Ayub for one in his second to have Peshawar Zalmi reeling at 3-2 in the third over.
The repair work began with Tom Kohler-Cadmore and Haseebullah Khan who counter-attacked with aplomb, the latter racing to an even 50 from just 29 balls from which he hit four fours and three sixes during their partnership of 82.
He was eventually dismissed by Tabraiz Shamsi, which brought Powell to the crease.
The Jamaican picked up from where Khan left off plundering the Karachi Kings bowling during a partnership of 85 from 51 balls before Amir had him caught behind in the 19th over. By then Peshawar Zalmi has recovered to 169-5.
Aamer Jamal and Kohler-Cadmore added 28 from the last nine balls to what turned out to be the winning total. Kohler-Cadmore remained unbeaten on 56 while Jamal got his unbeaten 13 from just five balls.
Mohammad Amir was the pick of the bowlers taking 4-26.
The Karachi Kings made a proper go at the target with opener Matthew Wade scoring 53. However, they lost wickets regularly which slowed their momentum despite an unbeaten 57 from Imad Wasim, who clubbed 10 fours and a six in his 30-ball knock.
Azmatullah Omarzai and Jamal did the damage for Peshawar Zalmi with hauls of 3-28 and 3-43, respectively that ripped apart the Karachi Kings middle order.
Mujeeb Ur Rahman played his part dismissing Wade and Irfan Kkan to return figures of 2-28 as Karachi Kings ran out of balls at 173-8.
