Smith, 40, featured in three tests for England and retired in 2008 having also played first-class cricket for Kent and Middlesex, where he was captain.
He replaces James Whitaker, who left the position as part of a revamp of the team selection process in March after five years in the role.
Smith will choose another independent selector to work alongside him in a three-man panel with England coach Trevor Bayliss.
"I was very happy with what I was doing previously but the chance to be at the forefront of this development in English cricket was too good an opportunity to turn down," Smith said in a statement.
"Selection and talent ID have always fascinated me and I've explored extensively how they are evolving.
"I'm very much looking forward to working with Trevor, Joe (Root) and Eoin (Morgan), as we work towards ensuring that the talent in English cricket feeds into consistent performances in all formats of the game."
The ECB also confirmed it will bring in a scouting system with "designated discipline-specific scouts" who will provide information to the selection panel.
First Published: April 20, 2018, 6:41 PM IST