Smith, 54, replaces close friend John Butler, who died of cancer on April 11.
San Diego President Dean Spanos said Smith, who worked under Butler for 14 years with the Buffalo Bills before following him to San Diego in January 2001, was the only person considered to continue the rebuilding job in San Diego.
"John and I talked shortly after he was diagnosed, and we agreed that if John couldn't be here, his successor was already in place," Spanos said.
"No one could ever completely fill John's shoes, but I'm going to do everything in my power to help this team return to the playoffs and the Super Bowl," Smith said.
Butler, known for helping to build the Bills' four Super Bowl teams in the 1990s as a personnel director, was promoted to general manager in 1993.
Smith replaced Butler that year, and the two drafted players such as perennial Pro Bowl guard Ruben Brown, Pro Bowl receiver Eric Moulds, running back Antowain Smith, defensive end Marcellus Wiley, and linebacker Sam Cowart, despite not having high picks.
When Butler became the Chargers' GM in January 2001, Smith was the first person he brought with him.
"As someone who worked side by side with John for so long, we know the procedures that have been successful over the past two drafts will continue with A.J. making the final decisions," Spanos said.
Taking over in San Diego after the Chargers finished 1-15 in 2000, Butler dramatically upgraded the team, drafting Pro Bowl running back LaDainian Tomlinson and quarterback Drew Brees in 2001, along with cornerback Quentin Jammer, linebacker Ben Leber, guard Toniu Fonoti, and receiver Reche Caldwell last April.
Those selections, along with Butler's free agent signings of Wiley and cornerback Ryan McNeil in 2001, and linebacker Donnie Edwards in 2002, helped the Chargers improve to 8-8 last season.
"John created a terrific infrastructure, and A.J. was the first and most important person John hired," Spanos said. "This makes for a logical and seamless transition."
This is Smith's second stint with the Chargers.
He served as Personnel Director from 1985-86 before joining the Bills as a scout in 1987.