Smith enlisted in 1962 and was commissioned into the Parachute Regiment in 1964. He has served in East and South Africa, Arabia, the Caribbean, Europe and Malaysia. As a major general, Smith commanded the British 1st Armoured Division during the Gulf War (1990–1991). He became the first Assistant Chief of Defence Operations and Security at the UK Ministry of Defence in 1992. While there he was intimately involved in the UK's development of the strategy in Bosnia-Herzegovina. In 1995 he was Commander UNPROFOR in Sarajevo, and was responsible for breaking the siege of the city by creating the UN Rapid Reaction Force, and ultimately thereby bringing the war to an end. Between 1996 and 1998 he was General Officer Commanding Northern Ireland. His final assignment was as Deputy Supreme Allied Commander Europe between 1998 and 2001, covering NATO's Operation Allied Force during the Kosovo war, and the development of the European Security and Defence Identity. He was promoted to general on 1 January, 1999, having previously been acting general. He is currently the Honorary Colonel of Exeter UOTC.

He is the author of The Utility of Force: The Art of War in the Modern World (2005, ISBN 0-7139-9836-9), a treatise on modern warfare that explains why the best military forces in the world win their battles but lose the wars. This is due to the paradigm change in military activity, from industrial war to the paradigm identified in the book as "war among the people" -- a situation in which an outcome cannot be resolved directly by military force.