The 25-year-old has played the last five seasons in Edmonton after coming to the Oilers in the summer of 2006 in a trade with Anaheim.
"I was really happy," Smid told the Oilers' website after coming to terms. "The negotiations were smooth and it was pretty quick. It only took a couple days to get done. Both sides could see that I really wanted to stay in Edmonton, so it wasn't a problem and I’m really glad to be part of the team’s future."
Smid recorded 10 assists and 85 penalty minutes this past season while playing in a career-high 78 games, although the Oilers finished last in the overall standings for the second year in a row.
"We ended up in 30th place but, as a group, we weren’t that experienced and lost a bunch of games by one or two goals," he said. "Near the end of the season, we also lost a lot of our key players. Hopefully this year we can stay healthy and play our system."
Smid, picked by Anaheim with the No. 9 selection in the 2004 Entry Draft, has played 331 NHL games, all with Edmonton, scoring 4 goals and adding 40 assists, along with 276 penalty minutes.