The 40-year-old will replace James Whitaker, who left the position as part of a restructure in March after five years in the role.
The England and Wales Cricket Board wanted someone in place for England's Test series against Pakistan in May.
Test Match Special commentator Smith retired in 2008 having also played first-class cricket for Kent and Middlesex, where he was captain.
The national selector - who is effectively the chief selector - will choose another independent selector - someone who is not a county coach or director of cricket - to work alongside him and England coach Trevor Bayliss on a three-man panel.
England will also bring in a scouting system with a minimum of 12 "discipline-specific scouts" who will provide information to the selectors.
It had been suggested former England head coach Andy Flower might have been in line for the national selector role.
Flower, 49, was in charge of England between 2009 and 2014, with current England team director Andrew Strauss captaining the side for a large part of his tenure.