In August 1935, Smith was approached to become the new manager of Blackpool, in place of the departed Sandy MacFarlane, an offer he immediately accepted; a love of the seaside apparently being one of the main deciding factors. After a tenth-place finish in 1935–36, he led the club to promotion in 1936–37 with a second-place finish in the Second Division. He then secured the club's First Division status with mid-table finishes in 1937–38 and 1938–39. On 10 March 1939, Smith and club director Albert Hindley made the football headlines when they completed the £10,000 record signing of Jock Dodds from Sheffield United. However World War II ensured that Smith's big signing barely featured in the Football League, though he went on to score well over 200 goals at Bloomfield Road during the war.