The former England winger's ill-fated move to rugby union drew to a close yesterday when Wasps agreed to his departure just four months into a three-year contract.
Smith, who cited personal reasons and a desire to return north, was in talks with the Rhinos last night and has penned a three-and-a-half year deal to re-join the club he left last November and help ease their current injury crisis.
Smith, 23, said on Wednesday morning: "It is a dream come true to get another opportunity to play for the Rhinos and pull on a blue and amber shirt again.
"I genuinely believed that my last game for the Rhinos would be last year's Grand Final at Old Trafford and that was an emotional occasion for me.
"Unfortunately things did not work out for me at Wasps but I am grateful to them for allowing me to return home and move on to the next stage of my career.
"I always said that, if I did return to rugby league, that Leeds was the only club I was interested in playing for and I am grateful to Paul Caddick, Gary Hetherington and Brian McClennan for allowing me another opportunity to play for my club.
"I can't wait to get a game under my belt. It has been frustrating because all players just want to play rugby."
On his departure from Wasps, Smith said: "I would like to thank London Wasps for giving me the opportunity to have a go at playing rugby union.
"Unfortunately things have not worked out for me and I am returning home to be closer to my family.
"I have made some good friends at Wasps and would like to wish the players and coaching staff all the best for the remainder of the season."
Smith could make a dramatic second debut in Leeds's derby against bitter rivals Bradford Bulls at Headingley Carnegie tomorrow night.
He switched codes in December after featuring with England in their Gillette Four Nations campaign.
However, Leeds-born Smith made just two first-team appearances with Wasps and played only twice for their A team.
Wasps director of rugby Tony Hanks said: "As a club we support Lee's desire to return home to his family and we thank him for his efforts with the club – making two senior appearances against Newcastle and Scarlets, as well as two run-outs with the A League.
"Everyone at Wasps wishes him the very best in the next stage of his career."
Smith scored twice, including the match-winning try, in his last Leeds appearance, the Grand Final victory over St Helens last October.
With his ability to play wing, centre or full-back, his versatility would be crucial for the injury-plagued champions who have endured a miserable start to the current campaign, losing five of their eight games heading into the busy Easter period.
High-flying Warrington are believed to be one of a number of clubs also showing interest in him although Wolves coach Tony Smith dismissed that suggestion last night and everything is set for Smith to return to the club he helped win each of the last three Super League titles.
Ninth-placed Leeds hope to have captain Kevin Sinfield and Samoan prop Kylie Leuluai back for tomorrow's game and Smith could slot straight back in against their rivals who sit just one place above.
Hetherington added: "We're really looking forward to what is a huge fixture for both clubs.
"There's great rivalry between Leeds and Bradford and we're happy going into it with what we think will be a pretty strong side."
Leeds prop Ryan Bailey was last night cleared to play tomorrow. He was found guilty of a "chicken-wing" tackle on Wigan prop Stuart Fielden during the champions' 24-4 defeat at the DW Stadium last Friday.
Bailey was fined 300 but was not suspended.