New Zealand captain Tom Latham also confirmed batsman Will Young will make way for former captain Kane Williamson, who returns to action in Christchurch on Thursday after missing the Black Caps' triumphant tour of India due to injury.
Smith's selection continues his rapid rise in New Zealand cricket ranks, having earned his first national contract in September before playing a single international.
The seam-bowling 26-year-old topped the wickets charts in New Zealand's first-class Plunket Shield competition this season, with 33 dismissals for Wellington in the 2023/24 season.
"He's someone that has deserved his opportunity over a period of time, and it's a really exciting challenge for him in a great series," Latham told reporters at Hagley Oval on Wednesday.
"We're looking forward to getting behind him."
Young's omission will be a bitter pill to swallow after the top-order batter was named player of the series against India.
He scored 244 runs at an average of 48.80 batting at number three on the tour, having replaced master batsman Williamson, who was ruled out of the series by a groin injury.
Latham said Young was unlucky to miss out against England.
"He did a great job for us,'' Latham said.
"He's been fantastic over the last period of time, but having someone like Kane come back in, it boosts the side with the calibre of player that he is."
New Zealand and England split a memorable two-match series 1-1 in Mount Maunganui and Wellington on the last tour of Ben Stokes's squad in February, 2023.
The current series returns to Wellington for the second Test from December 6, before finishing off with the third match in Hamilton from December 14.
A series sweep could secure New Zealand a place in the World Test Championship (WTC) final and a chance of reclaiming the trophy they won by beating India in 2021.
Latham said his players were not concerned about the bigger picture, and were now only focusing on the days ahead at Hagley Oval.
"If we get into that position of getting a chance (for the WTC final), then that's great, but I think that's a by-product of doing the things that we do well over a period of time," he said.
