The two clubs were in negotiations over a deal all day, and agreed a fee in the region of £1 million.
Fulham confirmed on their website: "Fulham Football Club has this evening confirmed the signing of Matt Smith from Leeds United on a three-year deal, with an option of a further 12 months. The deal will see the player at the club until at least the summer of 2017."
Smith takes the number nine shirt at the club, and is reunited with former Leeds teammate Ross McCormack.
Neither player is yet to score in the Championship yet this season, but Fulham will hope the addition of Smith can help lift them out of the relegation zone, where they sit without a win after their opening five games.
Smith had signed a new contract with Leeds back in April. In response, Leeds last night made the loan addition of Souleymane Doukara from Catania, into a permanent deal.
Smith had scored 13 goals in 43 matches for Leeds last season after joining the club from Oldham Athletic.
Here is a look at how Leeds fans reacted on Twitter to his sale:
Let's be honest if want to go up in the nxt few season we need better players than matt smith #lufc— Sim Lufc (@1simmo1) September 1, 2014
Matt Smith works hard and was very committed but technically a poor player #lufc— Tom Huffinley (@TomHuffinley) September 1, 2014
Matt Smith to Fulham for £1m is as crazy as McCormack going for £11m, except this time it's us getting shafted #lufc— The Mad Leeds Fan (@TheMadLeedsFan) September 1, 2014