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The All Blacks play the Wallabies in Sydney on August 19 and in Dunedin on August 26 after which Smith will activate a clause in his contract that entitles him to a sabbatical.
Smith's decision follows in the footsteps of All Black greats Dan Carter and Richie McCaw who also activated sabbatical clauses during their careers.
It means the 31-year-old 62-Test All Black vice-captain will sit out the rest of the year which includes eight more All Blacks tests.
"Contractually he's on sabbatical now," Smith's manager Warren Alcock told NZME.
"As soon as Super Rugby finished he was entitled to take it. He has decided to make himself available for the two Bledisloe games because he has missed some rugby this year.
"The expectation is he will start his sabbatical after those two games."
NZ Rugby Players Association boss Rob Nichol said earlier this month a sabbatical clause was helpful in extending players' careers and ensuring they stay motivated.
"If they know they have got a dedicated break coming up, when the pressure is going to be off, and they know they can actually disengage from the environment completely, that has as much as value leading up that break as the break itself.
"If you can use that to your advantage to keep the player, and to keep him motivated, and inspired to continue on the path they are on with NZ Rugby, then you would be absolutely foolish not to take advantage of it."
