Smith, who can play either at lock or prop, has only managed 33 NRL games since his debut for the Panthers back in 2015.
The 27-year-old Darwin-born forward played a single game with Penrith in 2015, before managing two at the Roosters during 2016 and 2017.
The former prodigious talent, who represented the Australian Schoolboys in 2012 and was a large part of the Panthers' under-20s team from 2012 to 2014, has never been able to kick on at NRL level.
He managed 30 games for the Bulldogs over the past four years however and has improved his game in the middle third of the park, also lining up at second-row on occasion.
2019 was his best season, playing in 20 of the 24 games for Canterbury which led to a contract extension, however, injuries heavily hampered his 2020 and 2021 season, while COVID meant opportunities to return through second-tier football were limited.
He will serve as a handy back-up option for Ivan Cleary's side upon his return to Penrith, with the coach confirming to the Sydney Morning Herald that the signature was done, although there has been no official announcement by the club.
“He debuted here in our last game in 2015,” Cleary said.
“It’s great to have him back. He’s an old Penrith boy, and it’s important to bring guys back.”
Smith's signing means the Panthers now have a full squad for the 2022 season, following the signatures of Mavrik Geyer, Thomas Jenkins and former Warriors' half Sean O'Sullivan who, like Smith, will be making a comeback to his junior club. O'Sullivan, however, never played for the Panthers at NRL level and will look to make his first appearance for the club in 2022.
Both players were part of Penrith's successful junior academy, which delivered the club their first premiership since 2003 this season.