Smith is now due a partially guaranteed $6.898 million base salary in 2015, compensation that becomes fully guaranteed if he's on the roster on the first day of the 2015 league year.
His original four-year rookie contract, which included a $3.926 million signing bonus, was due to expire after next season and the Ravens were facing a May 3 deadline to pick up his fifth-year option.
Under the collective bargaining agreement, the Ravens had the right to retain Smith through the 2015 season for the salary-cap percentage average of NFL cornerbacks who have the third to 25th-highest salaries in the league for 2014.
A 2011 first-round draft pick from Colorado, Smith, 25, started every game last season and recorded a career-high 58 tackles and 15 pass deflections along with two interceptions and two forced fumbles. In three NFL seasons, Smith has 112 career tackles, 26 pass deflections and four interceptions.
The Ravens were long expected to pick up the option for Smith, an imposing, athletic cornerback at 6 feet 2, 200 pounds who has emerged as one of their top defensive players over the past year.
The Ravens would also like to sign Jimmy Smith and wide receiver Torrey Smith to long-term contract extensions rather than have them play out their original rookie deals.
"We have no doubt we'll be investing the option in Jimmy when the time comes," Ravens coach John Harbaugh said during the NFL owners meetings in March. "We're hopeful that we can sign Jimmy long term."