Smith, whose new contract will keep him at Huddersfield until the summer of 2016 - the club has the option of a further year - turned professional at Manchester City, but never made a first-team appearance and joined Huddersfield ahead of the 2012/13 season.
"It was a brave decision to leave Manchester City and go in search of first-team football, but having signed the contract I feel vindicated," said the 21-year-old.
Smith, an ever-present since making his Huddersfield debut in the 2-1 Yorkshire derby win at Sheffield Wednesday in November, added on the club's official website: "The last two years of my career have been excellent.
"There have been tough periods along the way, but I have really enjoyed them and I'm looking forward to what the future will bring.
"Signing the contract signals the start of a new chapter in my career - I'm just getting going.
"I want to continue progressing and moving up and for me this is just the beginning.
"Although it is only two years, it is still the longest contract that I have signed and I'm looking forward to settling down and playing to the best of my ability."
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