Born Gladys Smith in Penticton, British Columbia, she first began acting as a teen, in summer stock in Canada before moving with her family to the United States. She was raised in Los Angeles.
After being discovered by a talent scout while attending college, Smith was signed to a contract by Warner Bros. Her earliest film roles were uncredited bit parts, and it took several years for her career to gain momentum. Her first credited role was in the feature film Dive Bomber (1941), playing the female lead opposite Errol Flynn. Her appearance in The Constant Nymph (1943) was well received and led to bigger parts.
During the 1940s, Smith appeared alongside some of the most popular male stars of the day, including Errol Flynn in Gentleman Jim (1942), Fredric March in The Adventures of Mark Twain (1944) and San Antonio (1945) (in which she sang a special version of the popular ballad "Some Sunday Morning"), Humphrey Bogart in Conflict (1945) and The Two Mrs. Carrolls (1947), Cary Grant in a sanitized, fictionalized version of the life of Cole and Linda Porter in Night and Day (1946), and Bing Crosby in Here Comes the Groom (1951), her favorite role.
Among Smith's other films are Rhapsody In Blue (1945), Of Human Bondage (1946), and The Young Philadelphians (1959). She also appeared on the Dean Martin and Jerry Lewis Radio (NBC) broadcast on 25 January 1952.
While Smith was under contract at Warner Bros., she met fellow actor, Craig Stevens, and they wed in 1944. In later years, Smith toured in several stage hits including the 1955 National company of Plain and Fancy co-starring with her husband in Jean Kerr's Mary, Mary and Cactus Flower, also co-starring with Stevens.
Smith appeared on the cover of the May 3, 1971 issue of Time as the result of the critical acclaim for her singing and dancing role in Hal Prince'sBroadway production of Stephen Sondheim's Follies, which marked her long-awaited Broadway debut. In 1972, she won the Tony Award for Best Actress in a Musical for her performance.
Her stage career continued through the 1970s, with appearances in the 1973 all-star revival of The Women (1973), the short-lived re-working of William Inge's drama Picnic, re-titled Summer Brave (1975), and the ill-fated musical Platinum (1978), which earned Smith another Tony nomination for her performance but closed after a brief run. She then toured for more than a year as the madam in The Best Little Whorehouse in Texas, including a seven-month run in Los Angeles.
Smith returned to the big screen with star billing at the age of 54 in Jacqueline Susann's Once Is Not Enough (1975) opposite Kirk Douglas, followed byThe Little Girl Who Lives Down the Lane with Martin Sheen and Jodie Foster the following year and Casey's Shadow with Walter Matthau in 1978.
Smith had a recurring role on the television series Dallas as Clayton Farlow's sister Lady Jessica Montford in 1984, and again in 1990. She also starred in the short-lived 1988 series Hothouse, and was nominated for an Emmy Award for her guest appearance on Cheers in 1990.
Smith died of brain cancer in Los Angeles in 1993 on the day after her 72nd birthday. She had no children and her sole survivor was her husband of 49 years, actor Craig Stevens. Smith's final film, The Age of Innocence (1993), was released shortly after her death. Her body was cremated and her ashes were scattered over the Pacific.