"I wouldn't have signed if I didn't think we could win," Smith said. "This season has been tough, but there's still a lot of season left and there's still a lot of good players here."
Before signing the deal, Smith met with executive chairman Ron Fowler and team president Mike Dee.
"Ownership is committed to winning," Smith said. "That was my first question -- 'Are we going to try and win and try and win now?' And the answer was, 'Yes.'"
Smith, 31, took a team-best .281 average and a 2.5 oWAR (Offensive Wins Above Replacement) into Wednesday's series finale against the Reds at Petco Park.
Smith had three hits during Tuesday's 8-2 victory, including his ninth home run of the season. He has 25 RBIs, an on-base percentage of .384 and a slugging percentage of .506 this season.
Smith cited his work with the two hitting coaches -- Phil Plantier and Alonzo Powell -- in Spring Training as a big reason for his success.
"I got with Phil and Alonzo, and there were some things in my swing I've been trying to do for a while that for whatever reason, the way they kind of explained the next steps to take, I understood and was able to do the small things they asked me to do," Smith said of a couple of mechanical fixes he made.
Hoping to improve the Friars' performance against right-handed pitching, then-general manager Josh Byrnes acquired Smith from the A's on Dec. 3, 2013, for reliever Luke Gregerson.
After a slow start in April (.246), Smith hit .354 in May, with four home runs and 13 RBIs. A left-handed hitter, Smith has a .290/.383/.523 line against right-handed pitching this season.
Smith also hasn't been affected by his new surroundings, as he's hitting .322 in spacious Petco Park.
"He's been what we've expected and exceeded that," said Padres assistant general manager A.J. Hinch, who has presided over the day-to-day operations of the Major League team since San Diego dismissed Byrnes on June 22.
The Padres started talking with Smith before Byrnes was dismissed, and the club recently re-engaged with him and his agent.
"Seth made it clear to us he wanted to be here," Hinch said. "The desire to sign him, the willingness from ownership to sign him was strong. This is a good outcome for the Padres and a good outcome for Seth."
The Padres will now owe roughly $39 million next season to six players -- Carlos Quentin ($8 million), Joaquin Benoit ($8 million), Cameron Maybin ($7 million), Smith ($6 million), Cory Luebke ($5.375 million) and Will Venable ($4.25 million).