Smith was appointed caretaker manager of Walsall on 4 January 2011, following the dismissal of Chris Hutchings. Seventeen days later he was announced as permanent manager of the club until the end of the season. Taking over managerial duties with his side nine points adrift at the foot of League One, Smith managed to steer Walsall out of the drop zone before the season's end. On 29 January, the "Saddlers" recorded their best league result since 1986 by beating Bristol Rovers 6–1, in what was Smith's first win in charge; the three points also took Walsall off the foot of the table, though they were still seven points short of safety. His team made up the difference over February, and a 1–0 win over promotion chasing Southampton on 1 March saw Walsall climb out of the relegation zone for the first time since October. They ended the season one point clear of Dagenham & Redbridge in the drop zone.