"I have spent most of the summer pursuing Chris and I am absolutely delighted to have captured him," boss Jim McIntyre told the Pars website.
"He is a top goalkeeper and he will get better and better. It is up to Chris to stay number one, he knows he needs to play well."
Recent capture Kyle Allison and Greg Paterson are the other keepers on Dunfermline's books, Greg Fleming having departed the Fife club this summer.
"It is a position that is vital to us because a good goalkeeper can make 12 to 15 points in a season," added McIntyre.
Former Scotland Under-21 keeper Smith was a regular in Gus MacPherson's St Mirren side until sustaining cruciate ligament damage in March 2009.
In the months that followed, one-time Dunfermline stopper Paul Gallacher joined Saints and established himself as the Paisley side's number one, with Mark Howard acting as back-up.
After recovering from surgery, Smith had an initial spell at Dunfermline in December but a foot injury saw him return to St Mirren.
However, a second loan saw him finish the 2009/10 campaign with the Fife club.
"He was on loan there last season and obviously made a big impression - we wish him well with his new side," new St Mirren manager Danny Lennon said on the Scottish Premier League club's website.
Source: BBC Sport
Source: BBC Sport