The quarterback's future with the 49ers, who selected him with the first overall pick back in the 2005 draft, appeared to be in doubt in recent days after the team pursued free agent Peyton Manning.

Smith himself met with the Miami Dolphins over the weekend but with Manning opting to join the Denver Broncos instead, has now decided to extend his stay in San Francisco.

"We are pleased that Alex has chosen to continue his career as a 49er," general manager Trent Baalke in a statement.

"His contributions were instrumental to our success in 2011, and we look forward to the continued growth of our offense under his leadership."

Smith led the team to a 13-3 record and the NFC West division last season, throwing for a career-high 3,144 yards with 17 touchdowns and only five interceptions.

He will return to work with an offense that has added wide receivers Mario Manningham, a Super Bowl winner with the New York Giants, and Randy Moss in the off-season.