The 27-year-old has been a free agent since he left MLS side Portland Timbers towards the end of 2012.
The defender, who left Ibrox in 2010 after breaking through as a youngster, has signed a two-year deal which will come into effect from September 1.
Smith and the other new signings will be able to appear as trialists before September as Rangers are banned from registering players until after the closure of the summer transfer window
Smith has already met up with many of the current Light Blues squad after Rangers boss Ally McCoist granted him use of the Murray Park training facilities following his return from the US.
The Scotland B international joins goalkeeper Cammy Bell, midfielders Nicky Law and Arnola Peralta, and forwards Jon Daly and Nicky Clark in agreeing moves to the Scottish third division champions.
The move has already been welcomed by Rangers forward David Templeton, who posted on his official Twitter site: "Glad to see @Steven26Smith has signed today! Top lad and very good footballer."
After coming through the youth ranks, Smith made his professional debut back in November 2004 in a 3-2 win over Hearts.
He played 64 times for the club in his first spell before moving to Norwich City in 2010 before turning out for Aberdeen, Preston North End and Portland.