Before attending high school, Smith attended Millstone Middle School, in Millstone Township, New Jersey, where he graduated in 1999. From there, he moved on to Steinert High School and McCorristin Catholic High School before transferring to Lakewood High School. Smith played high school basketball for the first time at Lakewood High School. He would later transfer to Saint Benedict's Preparatory School and play basketball there as well. During his career there, he would average over 27 points, 6 rebounds and 5 assists. In the fall of 2003, Smith signed a letter of intent to play at the University of North Carolina at Chapel Hill.
In April 2004, following a 25-point performance at the McDonald's All-American Game (in which he was named game co-MVP with Dwight Howard), Smith decided to forgo college and declare himself eligible for the NBA Draft. He was selected eighteenth overall, in the first round of the 2004 NBA Draft, by the New Orleans Hornets—one of nine players who were drafted that year straight out of high school
New Orleans Hornets (2004–2006)
In his rookie season with the Hornets, Smith averaged 10.3 points, 2.0 rebounds and 1.9 assists per game. Smith participated in the Sprite Rising Stars Slam Dunk Competition in 2005, finishing behind Amar'e Stoudemire and the eventual winner, Josh Smith. The Hornets finished the season at 18–64 and failed to qualify for the playoffs. Smith was named the Western Conference Rookie of the Month three consecutive times in 2005: in January, February and March.
In his second season in New Orleans, Smith saw his numbers decline across the board, averaging 7.7 points, 2 rebounds and 1.1 assists. The Hornets spent part of the season in Oklahoma City because of Hurricane Katrina. The Hornets finished 38–44, helped by the playmaking ability of rookie Chris Paul; despite the 20-game improvement, they again missed the playoffs.
Denver Nuggets (2006–2011)
On July 14, 2006, the Hornets traded Smith and forward–center P.J. Brown to the Chicago Bulls for center Tyson Chandler. On July 20, Smith was traded again, this time to the Denver Nuggets for guard Howard Eisley and two 2007 second-round draft picks.
On December 16, 2006, Smith was involved in the Knicks–Nuggets brawl. The brawl began when Mardy Collins flagrantly fouled Smith on a fast break. Smith was suspended for 10 games. On February 20, 2007, Smith suffered a torn meniscus in his left knee which required knee surgery. He missed several weeks. Smith averaged 13 points, 2.3 rebounds and 1.4 assists in his first season with the Nuggets.
Smith's first trip to the playoffs during the 2006–2007 season, with the Nuggets, proved disappointing. Smith, a 39% three-point shooter during the regular season, failed to connect on any three-point shots in the first four games and was criticized for poor decision-making by coach George Karl. After game four, Karl informed reporters of his plan to bench Smith for all of game 5. Karl said, "He's done," and explained his frustrations over Smith's poor judgment to shoot a three late in the game, "I have no idea what planet that came from." Karl told the Associated Press that he had drawn up the play to give the ball to either Allen Iverson or Carmelo Anthony. Karl did not stop there and continued venting over Smith's poor play, "And then, of course the one with eight seconds to go, from 50 feet, I just love the dignity of the game being insulted right in front of me."
On October 13, 2007, Smith was involved in an incident at a Denver nightclub. The Nuggets suspended him for the first three regular season games of 2007–2008 for his role in the incident. During the season, Smith averaged 12.3 points, 2.1 rebounds, and 1.7 assists.
In Smith's second trip to the playoffs, during a first-round matchup with the Los Angeles Lakers, he played 27.0 minutes, averaging 18.3 points per game on 53.5% shooting. He also had a 31.8% three-point shooting percentage; however, the Nuggets were swept in the first round.
On July 25, 2008, Smith was added to the Team USA Basketball select team to help the senior team prepare for the Olympics.
On February 10, 2009, Smith was chosen to replace the injured Rudy Gay in the 2009 Slam Dunk Contest.
On April 13, 2009, Smith scored a career-high 45 points on 13-of-22 shooting, as part of a 118–98 home win over the Sacramento Kings. He made a franchise-record 11 three-pointers during the game, which was one shy of tying the NBA record.
On his third trip to the playoffs, Smith averaged 14.9 points per game on 45.4% shooting. He helped the Nuggets make the Western Conference Finals before losing to the Lakers.
For the 2009–10 season, Smith and teammate Chauncey Billups agreed to change jersey numbers. Smith changed to the No. 5 jersey, in order to accommodate Billups' request to wear No. 1, the same number Billups wore with the Detroit Pistons. On December 23, Smith scored 41 points against the Atlanta Hawks which included 10 three-pointers, one shy of his record. Smith shot 10-of-17 from 3-point range.
He finished the 2009–10 season with the second most three-pointers in the league off the bench. Smith also averaged 15.4 points, 3.1 rebounds and 2.4 assists. The Nuggets, however, once again exited the playoffs early. The 2010–11 season was a season of change for the Nuggets, who traded Carmelo Anthony to the Knicks. Smith played his familiar sixth man role and averaged 12.3 points, 4.1 rebounds and 2.2 assists.
Zhejiang Golden Bulls (2011–2012)
During the 2011 NBA lockout, Smith signed with the Zhejiang Golden Bulls of the Chinese Basketball Association(CBA). Because he did not secure an opt-out clause, he could not return to the NBA until the end of the 2011-12 CBA season.
On February 1, 2012, Smith scored 60 points off the bench during a 122–110 victory over the Qingdao Eagles.Two days later, he netted 41 points off the bench in a narrow 119–115 triumph over the Shandong Lions.
During his time with the Golden Bulls, Smith won a Foreign Player of the Week award, and was selected as a starter for the Southern Division All-Stars in the 2012 CBA All-Star Game, but did not play due to "personal reasons."
Individual accolades notwithstanding, Smith was unable to lead Zhejiang into the 2012 CBA Playoffs, with the squad eliminated from contention as of February 12. But this also cleared a path back to the NBA, and he signed with the Knicks five days later.
New York Knicks (2012–2013)
In 2012, after playing in China due to the lockout, Smith signed with the New York Knicks under the bi-annual exception worth $2.4 million. Smith made his Knicks debut against the Dallas Mavericks. He scored 15 points and drained three three-pointers in the first quarter in a Knicks win. After struggling most of the season to shoot the three-pointer, the Knicks greatly improved because of Smith and the emergence of Steve Novak. Smith became a fan favorite, gaining comparisons to John Starks. He averaged 12.5 points, 3.9 rebounds, 2.4 assists and a career high 1.5 steals per game with the Knicks that season. The Knicks faced the Miami Heat in the first round of the playoffs, but lost 4–1. Smith averaged 12.2 points but only shot 31.6% from the field and 17.9% from three-point range.
On July 11, the Knicks and Smith agreed to a $2.8 million contract with a player option. The Knicks were allowed to give Smith a 20% increase on his salary. Smith said he had larger offers from other teams, but chose to remain with New York because he wanted to stay close to home and have a chance at a championship.
On December 5, 2012, Smith hit the game-winning, fadeaway jump shot in a game against the Charlotte Bobcats as time expired for a 100-98 win.
In similar fashion, on December 26, 2012 with one second remaining in regulation, Smith connected on a shot that gave the Knicks a 99–97 victory over the Phoenix Suns. Smith scored 27 points as the Knicks won without Carmelo Anthony and Raymond Felton.
On March 7, 2013, Smith scored 36 points in a losing effort, 95-94, to the Oklahoma City Thunder. He and the Knicks would avenge this loss a month later in Oklahoma City, 125-120. In this game, on April 7, Smith scored 22 points, five of which came in the closing minutes to put the game out of reach for the Thunder and give the Knicks their 50th win of the season for the first time since 2000.
On March 26, Smith scored 32 points against the Boston Celtics as the Knicks routed the Celtics 100–85 at TD Gardon.
On April 12, Smith scored 31 points on 13-for-16 shooting (81%) to lead the Knicks to a 101-91 victory over the Cleveland Cavaliers.
On April 22, Smith was awarded the NBA Sixth Man of the Year Award. He was the first Knick to win the award since John Starks, who did it in the 1996–97 season.
On April 27, Smith was suspended for Game 4 of the first round of the playoffs after elbowing the Celtics' Jason Terry in the chin