During the 2007–08 season, Smith established career highs for field goal percentage (.461) and 3-point percentage (.403). During the 2008–09 season, he averaged 15.2 points over 81 games (18 starts), finishing second in voting for the NBA Sixth Man of the Year Award behind Jason Terry. In February 2009, he participated in the NBA Slam Dunk Contest, finishing third. On April 13, 2009, Smith had a career-high 45 points and franchise-best 11 3-pointers to help the Nuggets clinch the Northwest Division title and home-court edge in the playoffs for the first time in 21 years with a 118–98 win over the Sacramento Kings.