Currently sidelined with a high ankle sprain, Smith has two goals and eight assists in 32 games this season.
He went into training camp on a two-way contract but Flames GM Jay Feaster says the blue-liner played his way into the starting lineup.
"When Mark Giordano went down with his hamstring injury, Smitty stepped-up and shouldered an increased workload and did so in excellent fashion," Feaster said in release. "Up until the time of his injury he was one of our best and most consistent defencemen."
Smith originally signed as a free agent with the Flames on July 13, 2011.