Former Crusaders and Northampton coach Smith has been part of Graham Henry's All Blacks set-up since 2004, helping the national side to attain an 86% success ratio during the last seven years.
Smith also served as New Zealand head coach from 2000 to 2001 and has been synonymous with Canterbury rugby following his successful spell in charge of the Crusaders and his performances at fly-half for the province during the 1980s.
He will link up with new Chiefs head coach Dave Rennie and his assistant Tom Coventry for the 2012 and 2013 seasons and, having been born in the Waikato town of Putaruru, the 54-year-old is looking forward to returning to his roots and helping to rejuvenate a side that endured a poor recent Super 15 campaign, finishing bottom of the New Zealand conference.
Smith said: "Even though I've lived in Christchurch for many years and consider myself a proud Cantabrian, I am also a Waikato boy. I have family and lifelong friends there and am really excited to take up this opportunity with the Chiefs.
"I know that the time is right to step down from my All Blacks role at the end of the year, but I was keen to stay in New Zealand and keep contributing to New Zealand rugby and this gives me a fantastic chance to do that."
Rennie added: "Smithy is one of the best coaches in the world. While his role will primarily be around defence and counter-attack, his experience will be of huge benefit to our playing and coaching group as a whole."
Gilbert has released a new line of rugby cleats. The Gilbert Virtuo 8S is part of the exciting new product. Check it out.
The entire All Blacks apparel line has been updated for 2013/14. Check out the New Zealand All Blacks polo.
The Nike Tiempo is a solid rugby cleat and one of few styles still made from full-grain natural leather.
The Gilbert Blitz 8S rugby cleat is a great cleat at a great price of $69.99. Get a new pair of cleats today.
A cool looking all black rugby cleat with the high performance adidas is known for. Get in the Gear!
Wear the crest of the British and Irish Lions on your t-shirt. A great look for the summer.
The All Blacks Performance t-shirt is black with hints of blue from the training jersey. Very Cool.
The New Zealand All Blacks training jersey for 2013/14. Get in the Gear!
The USA Rugby Pro Alternate rugby jersey is perfect for any fan of the Eagles. Get yours to wear during the summer Test matches.
The NEW All Blacks 2013/14 jersey has arrived at World Rugby Shop. Dare to wear the colors of the All Blacks.