She wore a matching wrap, a stack of bangle bracelets on her wrist and dangling earrings.
The guests of honor at the dinner were Indian Prime Minister Manmohan Singh and his wife, Gursharan Kaur, making Mrs. Obama's choice of the Indian-born, U.S.-based designer seem very appropriate.
Earlier today for a preview of the event, Mrs. Obama wore a skirt by Rachel Roy, also an Indian-American. "That gave us a preview that she was going to use clothes to convey a meaning," said Mary Tomer, author of the new book "Mrs. O: The Face of Fashion Democracy."
"They were really thoughtful choices," she said.
"The nice thing about it is the Jackie Kennedy sort of appropriateness. Most people wouldn't know one way or another about Naeem's background, but if one sentence gets mentioned to the prime minister, then her subtleness would pay off," added Hal Rubenstein, fashion director for InStyle magazine.
Khan told CNN's Larry King that his goals were to dress the first lady in something "Indian, chic, simple but very glamorous."
Rubenstein said he was impressed that Mrs. Obama used her fashion knowledge to choose a sophisticated and regal style that paid homage to India without wearing a traditional sari-style dress, which could have come off as a costume next to India's first lady.
"I think she looks fabulous," said Tomer. "She walked out in something that's figure-flattering and chic. Naeem's work is known for glamour and embellishment and this dress seems to embody that. She's sparkling and radiant."
Designer Khan is no stranger to helping women make a grand entrance; he has become a fixture on the Hollywood red-carpet circuit, dressing Beyonce, Carrie Underwood, Katherine Heigl and even Queen Noor of Jordan. Mrs. Obama's gown took three weeks at the designer's family workshop in India - with 40 people working on it - to complete, Khan said.
Of Mrs. Obama, Rubenstein said: "She looks like she's worth her weight in solid gold. What I love about her is that it's a pleasure to watch a woman of size and stature not apologize for her height and know how to stand tall."
President Barack Obama also drew Rubenstein's praise in his classic-style tuxedo. "I often feel Obama's suits are too big on him, but I think he got a new tux."