Fresh from his outstanding cameo with the BBL's Sydney Sixers this summer, Smith will join the Tim Paine-coached Sialkot Stallionz for the tournament that begins next month.
The maiden PSL appearance looms as a chance for Smith to keep pushing his case for an international recall.
The 36-year-old played the last of his 67 T20 internationals in February 2024 but has voiced a strong desire to play for Australia when T20 cricket makes its Olympic debut at the 2028 Games.
Typically an opening batter in the shortest format, Smith has joined as the Stallionz's maiden signing for their first season, with other overseas talent expected to sign on as part of the league's auction on February 11.
Smith took his great form from Australia's 4-1 Ashes triumph into this summer's BBL, where he averaged 59.8 from six knocks as the Sixers finished runners-up to Perth Scorchers.
Despite this form, Smith missed Australia's 15-player squad for the T20 World Cup being played from this month in India and Sri Lanka, with Travis Head and captain Mitch Marsh set to open the batting.
As recently as last month, Smith had expected the Major League Cricket season in winter would be his next cricket commitments after the BBL.
He is still set to be available for that tournament, which will fall between the PSL and Australia's two-Test home series against Bangladesh that is slated for August.
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