Smith had four seasons with the Melbourne franchise after a successful spell with Chiefs, where he won two Super Rugby titles.
The 28-year-old, capped six times by the Wallabies, will now embark on a new challenge with the mighty Hurricanes.
"I'll always be grateful for my time in Australia and I have really enjoyed playing for the Melbourne Rebels, but when the opportunity to play for the Hurricanes came up it was very appealing to me." said Smith, whose parents are from New Zealand and brought him up in Hamilton.
"To play for a team with such a proud history and from everything I've heard a great culture, while also being closer to my young son is something I'm very excited about.
"I'm looking forward to moving to Wellington later in the year, meeting everyone, and getting stuck into pre-season training."
Hurricanes head coach Chris Boyd said: "Toby has a long and accomplished career that has already included nearly 100 Super Rugby caps, 50 matches for Waikato and a Rugby World Cup campaign with Australia.
"That sort of experience is a valuable asset for any team and we're looking forward to his input from next season."
Photo by Getty Images. Caption: Australia prop Toby Smith on the charge against Fiji