Midfielders Smith was taken with selection number eight in the draft and the Canadian club were delighted to add him to their roster ahead of the 2013 campaign.
"We are very pleased to have come to terms with our first draft pick," said Impact sporting director Nick De Santis.
"He has shown good progress throughout camp. There is a big difference between the college game and the pros, so there will be an adjustment period for him. He has all the qualities to be a successful outside midfielder in MLS."
Smith, who starred with University of New Mexico last year, was thrilled to have impressed enough during pre-season to win a deal with the Impact.
"It's been a great preseason and I am really happy to be able to remain with the club," said Smith.
"Everyone is excited to kick off the season. I think that we have a good team feel and that we are going to have a good year. I'm looking forward to starting the season and to play in front of our supporters in Montreal."