Smith becomes a Cobbler
The 28-year-old signed for The Terriers back in February 2000 and had been offered a new two-year deal by the club's incoming consortium.
New Huddersfield manager Peter Jackson also spoke to the player about the new contract, but after rumours linking the hit-man with a move to Hartlepool, he has opted to sign for The Cobblers.
Jackson was hoping that the crowd favourite would remain at The McAlpine Stadium, but understood why he decided to move south to Northampton.
He told the club's official website: "It's a disappointment to lose Martin but I wish him all the best at Northampton. He did say he was happy here but I respect his decision to leave.
"We made him the best offer we could but Northampton obviously made him a better one.
"We went as far as possible to keep Martin but we have a strict wage budget to stick to and we are not going to exceed that for any player."
Smith is one of four new signings that have been confirmed by Northampton boss Martin Wilkinson.
He joins former Luton Town and Wimbledon defender Chris Willmott, ex-QPR midfielder Olivier Burgess and Carlisle keeper Luke Weaver, who have all signed up for the Sixfields' revolution.
Smith is the signing that will impress most Cobblers' fans as he is a proven goal scorer and Wilkinson was delighted to have got his man.
He told The Cobbler's official website: "We said we wanted to bring in players of quality and proven goal scorers and in Martin Smith we have a player in that mould.
"We set out a certain criteria of power, pace and height at the back, hard workers in midfield and goal scorers up front and that should give us a nice blend and balance."