Smith, chosen third overall behind quarterbacks Tim Couch and Donovan McNabb, was the last unsigned member of the celebrated quarterback class of '99.
The seven-year deal includes a $10.8 million signing bonus and will pay Smith as much as $56 million if he reaches various performance goals along the way.
The deal contains one voidable year, meaning it will automatically shorten to six years if he's in for 35 percent of the plays in his first year or 45 percent any following year.
The agreement came at the end of a second day of lengthy negotiations between Bengals officials and agent Leigh Steinberg, who flew to Cincinnati on Sunday to jump-start negotiations.
"Contracts are so statistical, especially for quarterbacks, and have a level of complexity that it simply takes time to work through," Steinberg said.
The agreement ends the longest impasse between the Bengals and a quarterback since David Klingler in 1992.
The Bengals weren't counting upon Smith to play much this season
he's been slotted as Jeff Blake's backup. But by missing most of training camp, he has missed important development time for a quarterback.
Before the deal was announced, coach Bruce Coslet said he wasn't sure whether Smith would be ready to assume the role of No. 2 quarterback.
"Who knows how fast he can pick it up?" Coslet said. "He's pretty bright. He's a couple of years older than a normal rookie, so he's pretty mature. And I think he probably has been working with the stuff we sent him, but that's not the same as being on the field time after time after time."
Smith, who had been working out on the West Coast, was flying to Cincinnati so he could sign the deal. The Bengals called a news conference for Tuesday.
The Bengals knew when they drafted Smith out of Oregon that he would be looking for a contract along the lines of those given to the other top quarterbacks taken in the draft.
After running back Ricky Williams signed a deal with New Orleans based heavily upon incentives, they wanted Smith's pay tied closely to performance as well.
It came down to a philosophical dispute between Steinberg, who wanted what he believed was market value for Smith, and the Bengals, who sought to change the market.
"And they ended up not doing it," Steinberg said. "It's fine. Everyone regrets the time out."
Klingler never panned out with the Bengals after his long contract impasse. Steinberg thinks there's a difference with Smith, who got o work out with the Bengals early this summer and was receiving information from coaches during the holdout.
"In the last couple of years, they've instituted these (programs) where he's spent a good deal of time in June and July in Cincinnati working out," Steinberg said. "So the point is, he's received more preparation time."
Smith's contract includes base salaries of $175,000; $250,000; $325,000; $350,000; $375,000; $400,000 and $450,000. Various escalators will push those numbers higher.
The first round of escalators clicks in when he passes for 1,601 yards, the second when he throws for 2,500 yards and appears in half of the plays.
The final two rounds of escalators have Smith finishing in the top five in various passing categories, and the Bengals winning a playoff game.
Couch agreed to a seven-year, $48 million deal with Cleveland, while McNabb got a seven-year deal from Philadelphia that could reach $54 million.
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