Smart agreed to a six-year deal that will pay him at least $3.75 million per season, with a base salary of $400,000 and $3.35 million from apparel deals, television and radio appearances, and other endorsements. He also could earn performance bonuses of up to $1.6 million if the Bulldogs win a national championship.
Smart, who played at Georgia and has been Nick Saban's defensive coordinator at Alabama since 2008, was formally approved as Mark Richt's successor during a meeting Sunday by the Georgia athletic association executive committee.
"It's an honor and privilege to return home to the University of Georgia and my home state," Smart said in a statement issued by the school. "I'm deeply appreciative of the faith President [Jere] Morehead, Greg McGarity, and the Athletic Board Executive Committee have demonstrated in asking me to lead one of the truly great college football programs in the country.
"I also want to thank Coach [Nick] Saban. I have been fortunate to spend 11 seasons with him as my mentor and have learned a tremendous amount from him as a coach and teacher. I'm honored and excited for the opportunity at Georgia and promise high energy, effort every day, and hard work every minute on the part of all our coaches, staff and student-athletes."
Saban said Kirby will be at Georgia for the next week to 10 days before coming back to Alabama to prepare for the College Football Playoff.
"We are really excited for Kirby and his family," Saban said in a statement. "He's worked really hard and has done a great job for the University of Alabama, and he's done a great job working for us for a really long time."
Bryan McClendon, who was Richt's assistant head coach and also works with the receivers, will serve as Georgia's interim head coach during the Jan. 2 TaxSlayer Bowl against Penn State in Jacksonville, Fla. The other assistant coaches are staying on as well.
Georgia athletic director Greg McGarity said that when he decided to make a change, it was clear that Smart was his top choice all along.
"It was critical to identify a person who would focus on a specific, defined process of developing championship football teams on and off the playing field," McGarity said in a statement. "Someone who understands the true meaning of a student-athlete by actually experiencing it himself -- someone who competed at the highest levels on the playing field, was mentored by some of the very best in the game, and understood the specific ingredients necessary to excel at the highest levels of college athletics -- Kirby Smart fits that profile."
Smart, who turns 40 on Dec. 23, has been widely regarded as one of the top assistants in the country.
The Associated Press contributed to this report.