The 25-year-old fly-half has committed his future to his boyhood club, where he has made 166 appearances and was part of the 2020-21 Premiership-winning squad.
"I'm super excited to sign a new deal with Harlequins," Smith said. "I love the Club; it's given me and my family a lot over the years and I'm looking forward to the future here.
"Every time I come in to the training ground, I'm excited about the future of the Club because I can see the level of talent we have in the building. We've always prided ourselves on our homegrown talent, and I think everyone is going to see more of that in seasons to come.
"Every time I play at The Stoop, I feel the love from the fans and their support for not only myself, but the team -- I think they provide the best support this league has to offer. Personally, and collectively, we are all so grateful for them.
"I've come through the Academy and still play with a lot of my best mates -- hopefully we can achieve more of our dreams together."
Smith has 41 international caps for England, scoring 284 points.
He is the 10th player to pledge their future to the Quins in the last month, including vice-captain Cadan Murley and flanker Will Evans.
Harlequins head coach Danny Wilson said: "Marcus is a world-class operator at fly-half. He has individual moments of brilliance and flair that can win rugby matches as well as the ability to manage games, which has seen him develop into an elite international fly-half.
"He's a product of our Academy system and a fantastic example to young aspiring players throughout our pathway, and wider rugby community of what hard work and talent can produce.
"Marcus' commitment to Harlequins until 2028 is testament to his relationship with the Club and vice versa."