The 35-year-old Saracens hooker will take up his new post with the Sharks, where he spent 15 years as a player, on July 1.
"I took a couple of days to think about it. It's a hell of a challenging job and one that can be very rewarding if done well," Smit told EWN Sport.
"(The Sharks) is a massive brand that I really believe in and it's been a massive part of my life, 15 years I spent there. The rugby side of it I know but there will be a massive amount for me to learn.
"But I'm surrounded by really good people and I look forward to starting.
"Toulon have been very good. I had signed a contract to play another year of rugby in the south of France and they've been very understanding of this opportunity and what it presents.
"When you're dealing with rugby people with rugby at heart, it's always quite easy to come to a resolution."
Smit will succeed Brian van Zyl, who will stay on board in a mentoring role until he retires in February after 20 years at the helm of the franchise.
Smit won 111 caps for the Springboks, captaining his country to their World Cup triumph in 2007 and to their series victory over the British and Irish Lions two years later.
Smit's international career ended in disappointment at the last World Cup but he has the opportunity to bow out on a high with Saracens, who are top of the Aviva Premiership table and in the semi-finals of the Heineken Cup.
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