The 24-year-old Smith is coming off a career-best season in which he had 14 goals and 26 points in 81 games. He also provided a bit of an edge in racking up penalty minutes. The deal announced Wednesday keeps Smith under contract through the 2016-17 season.
"It's hard to find good young NHL players, and when you get them, you want to make sure you have them for term if at all possible," general manager Bryan Murray said. "It allows us to have another good young player to build around."
A third-round pick in 2008, Smith has played in 152 games with the Senators. He also helped AHL Binghamton win the Calder Cup in 2011.
Smith's extension was completed less than a week after fellow center Kyle Turris signed a five-year extension with Ottawa worth $17.5 million.