The switch emerged on the eve of the IPL player auction, in Bangalore on February 20, less than two months after Dhoni resigned as India's ODI and T20I captain ahead of the recent home series against England.
"I have the highest regard for MS Dhoni as a leader and a person. Dhoni will continue to be an important part of our team," Sanjiv Goenka, owner of the Pune franchise, said in a statement. "He is supportive of the decision keeping the franchisee's best interests in mind."
At the toss for what was billed as his last match as captain of India - when he led India A against the England team in a tour match in January - Dhoni had said he wasn't done with captaincy and that he was still going to captain in the IPL and domestic cricket. After giving up the India captaincy, Dhoni showed good form, scoring his first ODI hundred in four years and his maiden Twenty20 international fifty.
Under Dhoni, Supergiants finished second last in their maiden IPL season in 2016, winning only five games and losing nine in a campaign ravaged by injuries to key players. It was the first time a team led by Dhoni failed to make the IPL playoffs. Dhoni scored 284 runs in 12 innings at a strike-rate of 135; Smith, who captains Australia in all three formats, made 270 in seven innings at a strike-rate of 153.
Dhoni was the franchise's first-choice pick in a player draft ahead of the 2016 season. That was Pune's first season in the league, having been brought in as one of two new teams - the other was the Gujarat Lions - in the wake of the suspensions of Chennai Super Kings and Rajasthan Royals after the IPL corruption scandal in 2013. This is the last year of the two-year contract the Supergiants signed with the IPL.
Until then Dhoni had been captain of the Super Kings since the IPL began in 2008. He was bought at the first player auction for $1.5 million, the highest paid player at the time and led Super Kings to the IPL title in 2010 and 2011, as well as the Champions League title in 2010 and 2014. Under him, Super Kings also finished runners-up in the IPL on four occasions.