The new one-year deal was announced on the eve of Smith's home round at Silverstone this weekend.
"Obviously, I am really pleased to be able to continue this journey with the Monster Yamaha Tech 3 Team and it's fantastic news to re-sign for another season," Smith said. "We will be going into our sixth year together and I must say that it is certainly nice to be giving the guys the results and performances that they deserve at the moment.
"So far in 2015, I have been finishing where we want to be which is very positive, as I'm sure that I am in debt to them for the first two years in the premier class! Everyone in the team has put their faith in me again and we know that 2016 will be tricky due to the changes in regulations, however, I am optimistic that this will give the satellite riders more of a chance to be competitive.
"Therefore I am confident about going into next year, as I know that everything will be fairer so we will continue to work together and we fully intend to take our sponsors onto the podium. 2016 will be exciting and I am more than pleased about being able to ride aboard the Yamaha YZR-M1 and with the Monster Yamaha Tech3 Team."
Smith is a career-best fifth in the world championship, as the top satellite rider and has outscored team-mate Pol Espargaro in nine out of the eleven races this year.
But the struggling Spaniard received a 2016 deal first, announced at Indianapolis, where Smith made his frustration clear at what he perceived as slow progress towards his own agreement.
Espargaro has always signed directly with Yamaha while Smith is contracted to the Tech 3 team, where the Englishman will now remain for a sixth season. Smith joined the French-based squad for the 2011 Moto2 campaign, stepping up to MotoGP in 2013.
In the past, team boss Herve Poncharal h as faced criticism for keeping faith in Smith. This year's success has thus been especially pleasing for the Frenchman, who told Crash.net before the summer break that his goal was to retain both Espargaro and Smith.
"I am super happy and proud to finally announce that Bradley Smith will remain with our team for one more year. Brad will hold the record with Colin Edwards for the amount of time in the premier class with Tech3, which is four years and this shows that he will be a very important rider in the team's history," Poncharal said.
"Of course, he deserves to be given the opportunity by the team together with Factory Yamaha to ride an M1 for another season after having had a fantastic first part of the year. In addition, the incredible win that he achieved with Pol and Nakasuga at the Suzuka 8 Hours was really impressive and he made us proud.
"Now we hope that the fact that his future is sorted will give him a big boost for his upcoming home GP and I am su re that he is going to be even stronger in the final rounds of the 2015 season compared to what we have seen so far."
Smith took his first MotoGP podium at Phillip Island last season and has a best race finish of fifth this season, scoring points in all eleven rounds.
Next year will see the introduction of a standard ECU, plus Michelin replacing Bridgestone as exclusive tyre supplier.
Almost all factory team rides will then be up for grabs in 2017, including the coveted seats at Movistar Yamaha and Repsol Honda.
