The home-grown back rower started the first three competitive games this term and even captained the Ospreys in the absence of both Ryan and Alun Wyn Jones in Leinster.
No date has yet been set for a comeback but the region have admitted that Smith, who missed the majority of last term with a groin problem, faces a 'lengthy spell on the sidelines'.
"Tom suffered a complex multi-ligament injury to his knee that will ultimately require surgery to repair the damage, which will take place over the next two weeks," said Ospreys head physio Chris Towers.
"The surgery will then be followed by a lengthy recovery and rehabilitation process."
As for Jones, the 32-year-old was due to be back in the Ospreys matchday squad for last week's comprehensive victory at Connacht following a long-standing shoulder problem but has since suffered a calf strain.
The former Wales captain will definitely sit out Saturday's home clash with Ulster, although the Ospreys remain hopeful that he will be fit to feature in the near future.
"The problem Ryan has got is he trained last week and he pulled up with a calf strain," said Ospreys' forwards coach Chris Gibbes.
"It's bad enough for him not to be able to play. We are feeling for him.
"He's a huge part of our squad. To have a guy like that involved in your squad is massive. It's unfortunate for Ryan, but others get an opportunity."
After facing last season's table toppers Ulster at the Liberty Stadium, the Ospreys kick off their Heineken Cup campaign at home to triple European Champions Leinster a week on Saturday.