It was proven by Dick Palais.
MR0088000 (19,451a) Reviewed Palais, Richard S. On the
differentiability of isometries. Proc. Amer. Math. Soc. 8 (1957),
805–807.
53.2X
MathSciNet
@article {MR88000,
AUTHOR = {Palais, Richard S.},
TITLE = {On the differentiability of isometries}, JOURNAL = {Proc. Amer. Math. Soc.}, FJOURNAL = {Proceedings of the American
Mathematical Society},
VOLUME = {8},
YEAR = {1957},
PAGES = {805--807},
ISSN = {0002-9939}, MRCLASS = {53.2X}, MRNUMBER = {88000}, MRREVIEWER = {K. Krickeberg},
DOI = {10.2307/2033302},
URL = {https://doi-org.ucc.idm.oclc.org/10.2307/2033302}, }
According to Palais, if I read his paper correctly, Myers and Steenrod proved the differentiability of isometries but Palais obtained an explicit description of smooth functions on the manifold from the metric geometry.