The 33-year-old Northampton Saints prop gained 61 Scotland caps over his eight-year international career, with his final appearance coming against England in the 2005 Six Nations.
Smith said: "It was a hard decision to make but one that I know is right for me and my family and it's definitely the right time to retire."
The veteran loosehead told his international team-mates in the aftermath of the Calcutta Cup defeat to the Auld Enemy that he was quitting Test rugby no matter what happened.
But despite the departure of coach Matt Williams and the move to bring in Frank Hadden as interim head coach, he has quit to spend more time with his family and club.
Smith added: "It was a hard decision to make but one I know is right for me and my family and it's definitely the right time to retire.
"I'm pleased with the changes which have been made recently but it's now time for me to focus on club rugby.
"I wish the new management and all the players every success in the future."
He was the only Scot to start every Test of the last two Lions tours - to South Africa in 1997 and Australia in 2001 - and earned plaudits for his performances along the way.
He captained Scotland throughout the 2001 Autumn Tests series and was awarded The Famous Grouse player of the season title for 2000-2001.
Smith, a tireless ambassador in raising awareness about epilepsy as patron of the charity Enlighten, has used his own experiences from having the condition to help others and encourage participation in rugby.
With a reputation as the quiet man, he did his talking on the pitch and was a formidable opponent known for his quick handling and loose play as well as his set-piece work.