The 18-year-old has agreed a deal which will keep him at Easter Road until 2012. Although he is remains eligible to represent the club's under-19 side, Smith says he now wants to become the latest Academy graduate to make the breakthrough at top team level.
Smith said: "I only have one ambition at the moment - to get into the first team. I'm going to keep working hard and will try and catch (John Hughes'] eye. I'm delighted that I'll be here for another couple of seasons and I really want to make an impression and get into the first team."
Smith represented Scotland's under-19 team during last month's Euro qualifiers in Croatia and Hughes is urging the teenager to continue working hard and to keep learning.
Hughes said: "I want players like Scott Smith to try and knock the current regulars off their pedestals.
"This is their chance, they need to act like men, learn fast and take the opportunity when it comes their way.
"Scott's a good player with a lot of potential and we need the likes of him to be pushing towards the first 11."
Meanwhile, Hibs signing target Richard Keogh has agreed a three-year deal with English Championship outfit Coventry City.
The 23-year-old Carlisle United defender was reportedly wanted by Hughes, who is searching for a right-sided defender to fill his problem full-back position next term.
But the former Republic of Ireland under-21 captain has opted for a move south, where he started his career with Stoke and Bristol City.