Grealish yesterday ended months of speculation over his future by signing a five-year deal worth around £125,000-a-week.
Smith reckons Villa delivered a “massive statement” by keeping their skipper and thinks it will help their transfer business.
Villa are set to take their spending for the transfer window past £75million with the signings of Emiliano Martinez and Bertrand Traore.
Smith said: “We have two players through the door before Jack signed his new deal in Matty Cash and Ollie Watkins.
“When I was having talks with them they both asked if Jack was staying and we told them we were hopeful he would.
“He is a big pull for any player that wants to come to Aston Villa because of what he did last season.
“I just think it is a massive statement of intent from the owners and what they want to achieve at the club.
“Jack is talismanic and we are only too pleased he has agreed to stay. There was a lot of speculation with a lot of massive clubs in this country looking at him but we could only deal with the player.
“It is a big boost to the dressing room and everyone associated with Villa.”
Grealish celebrated his new deal by helping Villa avoid Carabao Cup embarrassment at Burton last night.
The 25-year-old scored with a late volley as Smith’s men eventually overcame the Brewers 3-1 in the second round tie.
Grealish admitted to being “50-50” over his future before talks over the weekend with Villa’s hierarchy, including a FaceTime call with owner Nassef Sawiris.
“It was done within 24 hours,” he said. “I am delighted to have signed. I suppose I was 50-50 (on leaving), there was interest in myself, I truly believe everything happens for a reason.
“I have got the biggest smile on my face. Last season it didn’t go the way we planned, we stayed up but we wanted to finish higher.
“The owner, chief executive and manager have said to me about their ambitions for this season, That really persuaded me to get this done.”
Villa chief executive Christian Purslow said: “Jack is an emblem of our owner’s vision for Aston Villa. He joined our club as a local boy aged six and has developed into one of the country’s finest players finally becoming a full England international last week.
“We are determined to build a top team around him and are delighted that he is extending his contract and committing himself to the club he loves.”