The batsman will headline the league alongside a crop of big names including fellow Australia international Chris Lynn and a number of West Indies stars.
Smith, who was sacked as captain and banned for a year over a ball-tampering plot, has been cleared to play in domestic tournaments outside Australia by its cricket governing body.
According to cricket.com.au, David Warner has also been tipped to join the tournament, which begins on June 28.
Warner, like his former skipper, is suspended from professional cricket following the controversy which engulfed the Cape Town Test against South Africa in March.
The opener, who is banned from state and international cricket, is due to play domestic matches for Sydney grade club Randwick Petersham in the autumn.
Cameron Bancroft, who was banned for nine months over his part in the ball-tampering scandal, has also been cleared to play grade cricket.
The affair also led to the departure of head coach Darren Lehmann and an intense period of soul-searching among the Australian cricket community.
Earlier this month Smith announced he had returned Down Under after spending time in the US and vowed to win back the trust of his country.
"I have had some time away to come to terms with everything and now it's time to get back into it," he said.
The Toronto tournament will comprise six teams due to be announced on May 30.
Five of the six teams will represent Canadian cities - Edmonton Royals, Montreal Tigers, Toronto Nationals, Vancouver Knights and Winnipeg Hawks.
A Cricket West Indies representative team, including Chris Gayle, Andre Russell, Darren Sammy and Dwayne Bravo, will complete the field.
Other international players on the marquee list are South African David Miller, Sri Lankan Lasith Malinga and former Pakistan captain Shahid Afridi.
The teams will play 22 matches culminating in playoffs and a championship match will be held on July 16.
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