Smith, the No. 1 overall pick in the 2005 draft, did not play in 2008 because of a small fracture in his throwing shoulder. He played the first three games of 2007 before seeing his season cut short due to a separation to the same shoulder.

Because of his inactivity, the 49ers and Smith knew there was no way he could return this season under his scheduled base salary of $9.625 million. So the sides worked out a contract that reduced his pay by approximately $6.5 million.

Smith said it was not a blow to the ego to take a large pay cut after making $26.3 million over the first four years of his contract.

"Absolutely not -- absolutely not," Smith said. "I feel fortunate to get another chance and to get back on the field. I'm tired of watching. I'm tired of being in that training room and I'm ready to get back out there."

Smith has been promised an opportunity to compete for the starting job against Shaun Hill, who took advantage of Smith's absence to compile a 7-3 record in 10 starts the past two seasons. Veteran Damon Huard is also on the 49ers' roster, but he is currently viewed as a reserve who will not get a set amount of practice repetitions.

Smith had the opportunity to go to another team and start anew, but he decided he wanted to remain with the 49ers in hopes of providing the organization with some return on its huge investment.

"It was definitely important to me," said Smith, who has compiled an 11-19 record in 30 NFL starts. "I really felt like I had unfinished business here.

"This is the team that brought me out and gave me my first chance, and I really felt like I had a lot to prove here to myself, the organization, to my teammates, to the fans, and to really become the player I set out to become when I first came out of college."

Smith's return to the 49ers was in doubt ever since general manager Scot McCloughan said prior to the start of last season that Smith would not return to the team if he did not head into the offseason as the proven starter. Apparently, what McCloughan meant to say is that Smith would not return under the terms of his previous contract.

"Alex expressed a deep interest to remain with the team and that feeling was mutual," McCloughan said in a statement.

Smith is still plenty young to salvage his NFL career. He turns 25 in May. Smith is scheduled to take part in the 49ers' minicamp, which runs March 20-22 at the club's practice facility in Santa Clara, Calif.

The competition for the team's starting quarterback position will begin at that time.