The Northern Irishman’s existing deal included a clause triggering an extension after a set number of first-team games, and that has now been activated.
He is the fourth senior player at the Edinburgh club to extend his contract in recent weeks, following captain Craig Gordon, centre-back Craig Halkett and left-back Stephen Kingsley.
Smith, 33, remains an integral part of manager Robbie Neilson’s team despite the signing of Australian right-back Nathaniel Atkinson earlier this week.
“I’m really pleased that we’ve got Michael tied down for another season,” Neilson told the official Hearts website. “He’s a top player, an international-standard defender and his versatility makes him a tremendous asset for us.
“I know he’ll help drive us on to our goal of challenging at the top end of the league and for European football.”
Joe Savage, Hearts’ sporting director, hailed Smith as the perfect role model for other players in and around the club’s Riccarton training base each day. “Michael’s one of the longest-serving players in the squad for a reason; he’s a really talented and versatile player and a model professional,” said Savage.
“Those are the types of guys you want in your team and it made absolute sense for all parties to extend his contract by another year.
“The fans have really taken to him over the past five years and for any young player coming through our youth system, Michael is someone they should look up to.”