The left-back will take up a two-year contract from September 1 subject to registration once the club’s 12-month transfer embargo comes to an end.
Smith spent most of the 2012 MLS season with Portland Timbers and was a regular in their team during his relatively short time in the USA.
But they appointed a new coach who decided not to retain the 27-year-old for the current term despite a number of impressive performances at Jeld-Wen Field.
Although Smith could have been drafted to another team given he had a year remaining on his contract with the league, he chose to return home instead.
The defender spent much of his time with Portland away from his wife Claire and their two children so the chance to come back to Gers is ideal for him in that respect.
Smith trained with the Light Blues for the second half of last season and is delighted to be committing to them for the foreseeable future now as well.
He told RangersTV: “The priority for me was my family. My time in America was really enjoyable but it was time I spent away from them.
“My son is at the stage where he’s about to go to school and I want him to go to school in Scotland. England wasn’t an option and I didn’t even want to speak to clubs there.
“I got the opportunity to come in and train and I knew it might be difficult for me to get something because I had limited my options.
“The manager was good enough to give me facilities, I used them and I obviously did something right.
“It’s great to be back. It was obviously known I was training here from the tail end of last year and it’s something which has been at the back of my mind.
“I had a brief conversation with the manager before everyone finished up for the summer and I’m delighted to be here now.
“When I came here at first, it wasn’t in my thoughts to try to get a deal because I was still contracted in America.
“There was still an option to go back there and play both on their part and mine and that was the priority at that stage.
“But once I found out they weren’t taking up the option for me to back and I had given up my chance to return, things changed.
“I never really treated my time training here as a trial. I liked working hard so I just got my head down and it obviously worked because I’m sitting here today.”
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