Smith completed postdoctoral research appointments at Harvard Medical School from 1979–81 and Imperial Cancer Research Fund (now Cancer Research UK) from 1981-84. In 1984 he joined the staff of the National Institute for Medical Research (NIMR), becoming head of the Division of Developmental Biology in 1991. He moved to become director of the Gurdon Institute in 2001, returning to NIMR in 2009 to become its director. In 2014 he became Deputy CEO of the Medical Research Council.
Smith's research has focused on how cells of the very early vertebrate embryo form the specialised tissues of muscle, skin, blood and bone. His discovery of a mesoderm-inducing factor secreted by a cell line and establishing its identity as activin transformed the study of induction in the early embryo. He also showed that activin specifies different cell types at different thresholds and that characteristic genes like Brachyury are turned on at specific concentrations. His earlier work demonstrated threshold responses in chick limb development and also showed that the mitogenic response to growth factors can be active when attached to the extracellular matrix.