The New Zealand star suffered a hamstring injury in the 31-31 draw with the Chiefs in May and was initially ruled out for six to eight weeks.
Although the Highlanders have taken no risks with Smith, who will depart for Pau later this year, he is fit to play against the defending Super Rugby champion in Christchurch.
Smith's inclusion will come as a boost to the All Blacks, with the 33 year-old to see some club action ahead of the Rugby World Cup in Japan in September.
Highlanders coach Aaron Mauger told reporters: "He's trained really well in the first couple of days this week.
"He was touch and go last week, so we thought he would be a good chance for this week.
"He's done everything required and ran around at full pace yesterday, getting off the ground and getting in the air. He's 100 per cent confident that he's good to go."