Financial terms of the deal were not immediately available.
Smith, who turns 33 in May, ranks 32nd all-time in NFL history in receiving yards and is coming off his fifth Pro Bowl season. He's spent all 11 seasons with the Panthers after being selected in the third round out of Utah in 2001.
Last season he caught 79 passes for 1,394 yards with seven touchdowns playing under new offensive coordinator Rob Chudzinski in a pass-first offense. Smith went to the Pro Bowl along with rookie quarterback Cam Newton.
Derrick Fox, Smith's agent, said the ability to play for Rivera was a key factor in client's decision to return.
"He just loves playing for" Rivera, Fox said. "That is a huge difference. He knows that Ron knows what it takes to win. He's a winner and Steve has recognized that."
Hurney acknowledged Smith's age is a concern, but he feels like the veteran will continue to prove he's still a valuable player.
"There aren't a lot of receivers who play up into their upper 30s, but if anyone can do it, it's Steve," Hurney said. "His work ethic and his desire and his competitiveness are what set him apart from everyone else. He knows he's getting older. But he works so hard to keep himself in top condition. He knows with every year he has to work harder and harder. He's just so competitive."
This is the third time the Panthers have extended Smith's contract without him becoming a free agent.
After signing his rookie deal on June 19, 2001, Smith signed his first extension on March 1, 2007 just days before he was to hit the free agent market.
However, he was so productive, the Panthers gave him a new six-year, $45 million extension on May 4, 2007.
Smith's current contract was set to expire after this season.
Smith has caught 699 passes during his career for 10,278 yards with 59 touchdown receptions. He also has six returns for touchdowns four on punts and two on kickoffs.