On July 11, 2012, Smith re-signed with the Knicks. In 2012–13, he averaged a career-high 18.1 points, 5.3 rebounds and 2.7 assists over 33.5 minutes in 80 games off the bench. He earned Eastern Conference Player of the Week honors for the period ending March 31, after posting three consecutive 30-point efforts off the bench, becoming the first NBA player to accomplish the feat in over 23 years. He was subsequently named the NBA Sixth Man of the Year, becoming just the third player in franchise history to win the award, joining Anthony Mason and John Starks.