Having set the visitors an improbable 603-run victory target, Pakistan claimed the remaining six wickets in a little over a session on the final day to secure their first test series victory against Australia in 20 years.
The win also saw them leapfrog England, Sri Lanka and India to rise to number three in test rankings, behind South Africa and Australia.
Smith (97) added 107 runs with Mitchell Marsh in a rare display of Australian resistance in the two-match series before his post-lunch dismissal triggered a collapse with the visitors losing their last five wickets for only eight runs to be all out for 246.
"I think Misbah-ul-Haq and his team played some outstanding cricket in both test matches and we've certainly been outplayed," Australia captain Michael Clarke said at the presentation ceremony.
"In all three facets -- batting, bowling and fielding -- we probably let ourselves down. We were not good enough against the very good and experienced Pakistan team."
Zulfiqar Babar (5-120) and Yasir Shah (3-44) once again laid bare Australia's spin frailties even though Pakistan were without their main spinner Saeed Ajmal who has been banned for an illegal action.
Pakistan captain Misbah was adjudged man-of-the-match for his twin centuries in the match, the second of which equalled Viv Richards' record for the fastest test century in 56 balls.
Run-machine Younus Khan, who hit two centuries and a double hundred in his four innings, was the obvious choice for the man-of-the-series award.
Resuming on 143-4, Smith and Marsh (47) frustrated the Pakistani bowlers with a century stand, showing the stomach for fight which was missing in their team mates.
LEG-SLIP TRAP
Marsh, playing only his second test, proved the perfect foil for Smith, whose decisive footwork against the spinners and positive intent stood out in an otherwise Australian batting capitulation.
Marsh was looking set for his second fifty of the match when the 23-year-old walked into a leg-slip trap, flicking off-spinner Mohammad Hafeez straight into the hands of Asad Shafiq.
Smith hit Babar for successive boundaries to bring up his eighth test half-century and meted out the same treatment to the spinner in the final over before lunch to cruise into the 90s.
Yasir denied the 25-year-old Smith his fifth test century, trapping him leg before with the second delivery after lunch, which opened the flood gates and Australia collapsed in a heap.
"It's a really special series for me, because every individual performed," said Misbah. "That's a sign of a good team and I'm really happy."
Smith hit 12 fours in his 204-ball knock that proved there were no real demons in the dry and dusty pitch at the Sheikh Zayed Stadium.
Comprehensively beaten in the first test in Dubai, nothing went right for Australia in the second test either.
Not a single Australian managed a century in the test while Misbah and Azhar Ali got hundreds in both innings and Younus struck 213 in the first innings.
Australia's bowling limitations were also exposed as they could not bowl out their opponents even once, managing nine wickets in the match bleeding 863 runs.
