Born in Royalton, Vermont, Smith and his family suffered considerable financial problems and moved several times in the New England area. He was living in the home of his parents near Manchester, New York when his brother Joseph was permitted to bring the golden plates home and commence translation of the Book of Mormon. William is reported to have not been privileged to view them, but was allowed to feel them, open them and lift the soft case in which they were kept. He was baptized into his brother's Church of Christ on June 9, 1830 by David Whitmer, one of the Three Witnesses to the Book of Mormon.

On February 14, 1835, the Three Witnesses originally designated Phineas Young, brother of Brigham, as one of the inaugural members of the Quorum of the Twelve. However, Joseph Smith insisted that his own younger brother, William, be selected instead, "contrary to our feelings and judgment, and to our deep mortification ever since." William Smith was ordained an apostle on February 15.

On May 4, 1839, Smith and Orson Hyde were suspended from the Quorum of the Twelve by a vote of the church; however, Smith was readmitted to the Quorum on May 25. From April to December 1842, Smith was the editor of The Wasp, a secular but pro-Mormon newspaper in Nauvoo, Illinois. Smith was fierce in his editorial criticism of the anti-Mormon newspaper the Warsaw Signal and its editor Thomas C. Sharp, whom Smith referred to in the Wasp as "Thom-ASS C. Sharp". Smith resigned as the editor of The Wasp after he was elected to the Illinois General Assembly, and he was succeeded by fellow-apostle John Taylor, who edited The Wasp for another five months before replacing it with the Nauvoo Neighbor.

On May 24, 1845, Smith succeeded his late brother Hyrum Smith as the Presiding Patriarch of the church. Shortly after his ordination to this position, Brigham Young printed a clarification in a church newspaper that stated that Smith had not been ordained as patriarch over the church, but rather as patriarch to the church; Smith regarded this clarification as a slight, and it exacerbated the growing tension between Smith and Young. Smith was patriarch to the church until October 6, 1845, when his name was read at general conference but fellow apostle Parley P. Pratt expressed objections due to his character and miscreant practices. The conference attenders unanimously voted against Smith being retained as both an apostle and patriarch, and he lost both offices. Smith was then excommunicated from the church by Young and the Quorum of the Twelve Apostles on grounds of apostasy on October 19, 1845.

The relationship between William and Joseph was, at times, quite rocky. William is believed to have physically fought with or attempted to fight with his brother Joseph on more than one occasion, and it is said that at the time Joseph died, he was still suffering the effects of a beating he had received from William some time earlier. A fist fight was narrowly averted between the two on October 29, 1835 in Kirtland.

On October 6, 1845, over a year after the assassinations of his brothers Joseph and Hyrum, Smith was disfellowshipped from the church and removed from the Quorum of the Twelve by Brigham Young, the President of the Quorum of the Twelve Apostles. Smith responded by submitting a statement to an anti-Mormon newspaper in which he compared Young to Pontius Pilate. As a result of Smith's statement, Young excommunicated him for apostasy on October 19.

As a result, Smith did not follow Young and the majority of Latter Day Saints who settled in Utah Territory and established The Church of Jesus Christ of Latter-day Saints (LDS Church). Rather, Smith followed the leadership of James J. Strang and was involved with the Church of Jesus Christ of Latter Day Saints .

In 1847, Smith announced that he was the new president of the Latter Day Saint church and that he held a right to leadership due to the doctrine of lineal succession. He excommunicated Young and the leadership of the LDS Church and announced that the Latter Day Saints who were not in apostasy by following Young should gather in Lee County, Illinois. In 1849, Smith gained the support of Lyman Wight, who led a small group of Latter Day Saints in Texas. However, Smith's church did not last, and within a few years it dissolved.

Smith's relationship with Young remained strained until Young's death in 1877. Smith believed that Young had arranged for William's older brother Samuel H. Smith to be poisoned in 1844 to prevent his accession to the presidency of the church. However, in 1860, Smith wrote a letter to Young in stating that he desired to join the Latter-day Saints in the Salt Lake Valley. However, shortly thereafter Smith became involved as a soldier in the American Civil War, and after the war he did not show any interest in moving to Utah Territory

In 1878, Smith became a member of the Reorganized Church of Jesus Christ of Latter Day Saints (RLDS Church), which was organized in 1860 with Smith's nephew, Joseph Smith III, as its leader. The majority of Smith's followers also became members of the RLDS Church. While Smith believed that he was entitled to become the presiding patriarch or a member of the Council of Twelve Apostles of the RLDS Church, his nephew did not agree and William Smith remained a high priest in the RLDS Church for the remainder of his life.

Smith served a term in the Illinois General Assembly in 1842, being elected to the Illinois House of Representatives.

When Smith died at Osterdock, Clayton County, Iowa, he was the last brother of Joseph Smith, Jr. to die. He was survived by his sisters Sophronia and Catherine.