The New Zealand international, Town Supporters' Player of the Year last season, was not due to see his current deal expire until next summer but the Suffolk club have moved to tie him down for a further two years.
Smith, 23, started 37 Championship games for Ipswich last term, coming after he represented his country at London Olympic Games.
"I'm delighted to extend my stay at Town," Smith told the club's official website.
"It's great that the club have shown loyalty with me and that I've shown my loyalty to the club as well.
"I've been here since I was 16 years old and I love the club. Hopefully I can be here for a few more years to come and we can be successful.
"The club means a lot to me and I've developed a great relationship with the fans. It's also great to see players coming out of the Academy and into the first-team, like myself, Luke Hyam and Josh Carson."
- Sports & Recreation