A move to London Irish in the Aviva Premiership had previously been confirmed but a change in circumstances means that Smith will once again be playing RaboDirect PRO12 rugby in the coming season.
Speaking after signing his new contract, Smith said: "I'm delighted to have signed a new contract and to be staying at the Ospreys, my home region. We had a fantastic end to the season, winning the league again in such dramatic fashion in Dublin, and I'm really looking forward to helping the team build on that success.
"We've got a young and exciting group of players together for next season and there's a great buzz about the place. There's a lot of hard work to do between now and the first game of the season but I'm looking forward to wearing the Ospreys jersey at the Liberty Stadium again."
Since making his debut against Connacht back in February 2007 Smith has made 91 Ospreys appearances to date, scoring three tries. He will now be part of an Ospreys squad which will challenge for Heineken Cup honours from a demanding pool which includes Toulouse, Leicester Tigers and Benetton Treviso.
Andrew Hore, Ospreys Chief Operations Officer, added: "It's fantastic news for the region that we have been able to secure Tom's services until 2015. He is a real Ospreys stalwart and his experience and leadership is an asset to the organisation.
"Over the last 12 months or so we've had to make some very tough decisions for the long-term good of the business. However, because we didn't shirk these challenges we're now in a position where we are able to make decisions for the right reasons, rugby reasons.
"The move to re-sign Tom is an indication of the progress we've made and we all look forward to him continuing to have a real impact around our environment."