The former Aston Villa boss led Major League Soccer Eastern Conference side to a record points total of 51 and their first playoff win in 2024.
“Dean has been an exceptional leader for Charlotte FC and we are excited for him to sign a new contract,” said club owner David Tepper.
“The club’s success over the past year is a reflection of his dedication and commitment to excellence both on and off the pitch. We look forward to what the future holds with Dean leading the way.”
In his response, Smith thanked the club for their faith in him while assuring that they would consistently challenge for major titles.
The Englishman said: “I’ve thoroughly enjoyed being the head coach of Charlotte FC and I’m honored to sign a new contract with the club.
“Everyone at the club is aligned in our vision to be a leader in Major League Soccer. To our supporters, you have made our family feel welcome in this city and for that we’re grateful to each one of you.
“We will work together with the aim of consistently challenging for major trophies every season.”