Smith, who would have become an unrestricted free agent July 5, reportedly will make approximately $5.67 million per season under his new deal.
"We are pleased to sign Mike to a multiyear contract," general manager Don Maloney said. "Mike has emerged as a top NHL goaltender with his size, athletic ability and strong work ethic. He is capable of leading us to a Stanley Cup championship, the goal of our franchise. This is an important signing for our club."
Smith went 15-12-5 with a 2.58 goals-against average, .910 save percentage and five shutouts in 2012-13. He was 38-18-10 with a 2.21 GAA, .930 save percentage and eight shutouts in 2011-12, when he helped the Coyotes reach the Western Conference Final.
"I'm thrilled to re-sign with the Coyotes," Smith said. "We have a great young team and an excellent coaching staff and management team. I've really enjoyed playing in the Valley the past two seasons and this is where I wanted to stay."