Trailing McIlroy and Viktor Hovland by four shots after Saturday's play, Smith needed the perfect round at St Andrews or a capitulation from one of the front two.
The Australian produced the former, a five-hole burst of birdies taking him to a round of 64, his effort being complemented by a superb par at the difficult 17th hole.
From McIlroy's perspective, it is again a case of what could have been, the Northern Irishman posting a score of 70 after 16 pars and just two birdies.
Despite not posting a bogey all day, McIlroy's effort was effectively over par against the rest of the field, a consequence of several missed birdie attempts and too many second shots not being in close enough proximity to the hole.
Nevertheless, nothing should be taken away from the performance of Smith, the 2022 Players Championship winner making birdies at every hole between 10 and 14.
At the start of that run, Smith had trailed by three shots in search of his first Major crown, the 28-year-old living up to the belief that he is the best putter in the game.
A poor approach shot into the penultimate hole threatened to undo some of his previous stellar work, but a 10-footer for par kept the pressure on McIlroy in the group behind him.
McIlroy's missed 18-footer and Smith's subsequent tap-in birdie on 18 left McIlroy requiring an eagle on the last, something which was not achieved as his chip shot from 33 yards bounced past the hole.
While it will feel like an irrelevance, McIlroy ended the tournament in third position courtesy of Cameron Young making an eagle on the 18th hole.
Although making seven birdies on his opening 14 holes always kept the American in contention, he was always one or two steps behind Smith who is deservedly crowned the Champion Golfer Of The Year.
The American trio of Bryson Dechambeau, Patrick Cantlay and Jordan Spieth also claimed top-10 finishes, but world number Scottie Scheffler endured a frustrating day, ending the tournament in 21st place after posting a 74.