Smith was born in San Francisco, California and grew up in Southern California. Smith earned her bachelor's degree at Harvard University in Comparative Study of Religion, and her Masters of Divinity at the Union Theological Seminary in 1997. In 2002, she received her Ph.D. in History of Consciousness from UC Santa Cruz.

Smith has long been active in anti-violence activism, working as a rape crisis counselor and starting the Chicago chapter of Women of All Red Nations. Along with Nadine Naber, Smith cofounded INCITE! Women of Color Against Violence in 2000, and she plays a prominent role in its National Planning Committee. INCITE! is a national grassroots organization that engages in direct action and critical dialogue to end violence against women of color and their communities. Smith was also a founding member of the Boarding School Healing Project (BSHP). According to its website, the BSHP "seeks to document Native boarding school abuses so that Native communities can begin healing from boarding school abuses and demand justice." Smith has worked with Amnesty International as a Bunche Fellow, coordinating the research project on sexual violence and American Indian women, and she represented the Indigenous Women's Network and the American Indian Law Alliance at the United Nations World Conference Against Racism in 1991. In 2005, Smith was nominated for the Nobel Peace Prize "as a woman who works daily for peace" in recognition of her research and work regarding violence against women of color in the US.

On February 22, 2008, Smith received a negative tenure recommendation from the College of Literature, Science and the Arts at the University of Michigan. This decision has attracted "an unusual degree of attention from scholars, both at Ann Arbor and nationally" and prompted some observers to conclude "the University's tenure evaluation process discriminates against women of color and interdisciplinary professors."

A statement issued by an anonymous group of students and faculty from the University of Michigan protesting the decision immediately began circulating via email and among feminist blogs. The statement refers to Smith as "one of the greatest indigenous feminist intellectuals of our time" and highlights Smith's relevance as both a scholar and social justice advocate, noting that as "a result of her work, scholars, social service providers, and community-based organizations throughout the United States have shifted from state-focused efforts to more systemic approaches for addressing violence against women." A Facebook group in support of Smith's tenure bid and online petition to University of Michigan provost Teresa Sullivan soon followed.

Smith is the author of the following books:

• Sacred Sites, Sacred Rites (1998) ISBN B0006R030E
• Conquest: Sexual Violence and American Indian Genocide (2005) ISBN 978-0896087439
• Native Americans and the Christian Right: The Gendered Politics of Unlikely Alliances (2008) ISBN 978-0822341635

Smith edited and/or co-edited the following anthologies:

• The Color of Violence: The INCITE! Anthology (2006) ISBN 978-0896087620
• The Revolution Will Not Be Funded: Beyond the Non-Profit Industrial Complex (2007) ISBN 978-0896087668