Though India's Ajinkya Rahane and England's Ben Stokes were also considered for the post, it was Smith who eventually got the nod.
Speaking at the appointment of Smith as the captain, Royals' cricket director Zubin Bharucha said, "We have some great players and cricketing minds in the team with proven leaders like Steve Smith and Ajinkya Rahane. We came to the conclusion that Steve Smith would be the ideal candidate for the job. Smith has been incredible as captain of Australia. He is someone who leads the team by example."
Smith, on his part, said he is looking forward to work with his legendary countryman Shane Warne.
"It's great to be back with the Royals. It's an honour and privilege to be leading Royals and looking forward to working with the King (Shane Warne)."
Meanwhile, Warne, who was earlier roped in by Rajasthan Royals as their mentor, said that his side would continue to play intense cricket.
"We will play the Royals' brand of cricket, that is, with spirit and aggression, with which we are known to play with. I am looking forward to exciting cricket and a successful campaign."
Smith had been a part of the Rajasthan Royals team in 2014 and 2015. In fact, it was at Rajasthan Royals where he first stepped into the shoes of a leader and later took over as Australia captain as he flourished in the role.
Last season, Smith also led his team from the front to guide them to the finals of the tournament. He almost pulled off a successful chase with a brilliant knock but the team eventually fell just short of one run in the summit showdown against Mumbai Indians.
In 2017, Smith played 15 matches and scored 472 runs at an average of 39.33 while leading the side to runners-up finish.
Rajasthan Royals will kick-off their IPL season with an away game against Sunrisers Hyderabad on April 9 followed by a home game against Delhi Daredevils on April 11 at Sawai Mansingh Stadium in Jaipur . (ANI)