A four-way tie after day one was reduced to three heading into the weekend but there were still 17 players within three shots of the lead at the PGA TOUR co-sanctioned event.
Both 2023 champion McIlroy and Renaissance specialist Kim followed opening rounds of 65 with a 66 but it was Englishman Smith who stole the show with a blistering 63 to get to nine under.
In-form Englishman Matt Fitzpatrick was one shot off the lead after a 65, sitting alongside 2021 winner Min Woo Lee who fired a 65.
Defending champion Chris Gotterup and local hero Robert MacIntyre, the 2024 winner, were then part of a group of seven players at seven under.
Should McIlroy lift the trophy on Sunday, he will join Jon Rahm and Tyrrell Hatton on a record five Rolex Series victories, with his seven DP World Tour wins since 2023 coming in four Rolex Series events, two Masters Tournaments and his home open.
McIlroy made a strong start with four birdies on the front nine to reach the turn in 31 and move into a share of the lead. A bogey at the 13th briefly set him back, but he bounced back with a birdie at the next to card a second-round 66.
"I thought I played well again," he said. "You know, the wind definitely got up for us in the afternoon. We got off to a really nice start. Then sort of by the turn the wind had got to its strongest and felt like it was hard to get the ball close to the pins and we were all making a lot of pars out there.
"It would have been nice to be a couple better. But you know, it's obviously another good day and in good position.
"It's the way you want to play links golf and the weather, you can be creative the way you play your second shots into greens and how you run into the fairway. It's a fun way to play."
The day belonged to Smith, however, who rattled off four birdies in a row from the 11th and added another on the 17th to turn in 30. He then made another gain on the second before sandwiching a bogey on the sixth with a pair of birdies to hit the summit.
"You've still got to hit the fairways and greens, but I think the putting today was a lot better than yesterday," he said.
"I think if I can keep the same attitude I've had for the last two days, I'll be very happy with that. I think the swing is in a good place. Just hope that putter stays as hot as it was today."
Scottie Scheffler's remarkable run of consistency came to an end on Friday after the world No. 1 missed the cut at the Genesis Scottish Open, ending a streak of 78 consecutive made cuts that had stretched back nearly four years.
Former champions Rory McIlroy and Bernd Wiesberger are locked at the top of the Scottish Open leaderboard with Patrick Cantly, Rasmus Hojgaard and Tom Kim after round one.
Should Norway upset England at the FIFA World Cup this weekend, Viktor Hovland wants all of Scotland to join him in a traditional rowing celebration at the Scottish Open on Sunday.
A superlative eagle on the final hole earned South African Michael Hollick his first DP World Tour title at the BMW International Open on Sunday.
