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Smith will be playing alongside other international stars such as Chris Gayle, Andre Russell and Shahid Afridi in the six-team tournament beginning June 28, organisers Cricket Canada said in a statement.
The 28-year-old, who was suspended for 12 months in March for his role in the South African ball-tampering scandal in March this year, is allowed to play domestic tournaments outside Australia by Cricket Australia.
David Warner, who was the vice-captain, was also banned for 12 months and Cameron Bancroft was suspended for nine months for their role in ball-tampering during the third Test in Cape Town.
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Smith, the then world’s number one Test batsman, was sacked and sent home in disgrace after the third Test against South Africa in March.
In the wake of the ball-tampering controversy, he also stepped down as skipper of Indian Premier League franchise Rajasthan Royals before the BCCI banned him from the cash-rich league.
Smith is also serving a ban for two years from holding a leadership position within the Australian team and he must undertake 100 hours of voluntary service in community cricket.
The Global T20 Canada consists of five Canadian teams and a Cricket West Indies representative team, made up entirely of players from the Caribbean. A draft to determine who plays where will be held next week.
The six teams in the competition are the Caribbean All-Stars, Toronto Nationals, Montreal Tigers, Ottawa Royals, Vancouver Knights and Winnipeg Hawks.
Speaking about the association, West Indies Cricket Board President Dave Cameron, said, “I would like to wish Global T20 Canada much success. The growth of our region will largely depend on the success of leagues and tournaments like this.
“We support Cricket Canada and look forward to working even closer going forward, so congratulations and all the best to Cricket Canada and Mercuri Group.”
The league will comprise 22 matches culminating in playoffs and the championship match on July 16.
All contests will take place at Maple Leaf Cricket Club, a cricket-specific facility just north of Toronto that will be expanded to a capacity of 7,000 seats.
“Global T20 Canada marks the first time a nation with associate member status is launching a league a major step forward in cricket’s global development,” said Ranjit Saini, President, Cricket Canada.
“Canadian cricket fans will have a great opportunity to see up close many of the world’s greatest players, and I’d like to thank International Cricket Council, CWI and the international cricket community for their guidance and support in growing cricket in Canada.