Graydon returned to the club as a special guest having been voted by fans as the Walsall legend that will appear on the Broad Street Walk of Stars in Birmingham city centre.
Graydon, who guided the Saddlers to two promotions in 1999 and 2001, was presented with a special plaque on the pitch at half-time.
And he told the club's official website: "It was a fantastic reception. Not only was I humbled when I was told that the supporters had voted me for this honour, but the welcome they gave me on Saturday is something I will never forget.
"There are too many highlights from my time here to list but, as with any achievement, it was down to a team of people and not just one individual. I have never shaken so many hands, a lot of people are still here who I got on so well with and were so important to me. It was also pleasant to see so many friendly faces.
"From the bottom of my heart I would like to thank everyone so much, you've made an old man very happy indeed."