In 1845 he was appointed Astronomer Royal for Scotland, based at the Calton Hill Observatory in Edinburgh, and professor of astronomy in the University of Edinburgh. Shortly after his appointment, the observatory was placed under the contol of Her Majesty's Treasury and suffered from a long series of under-funding. Because of this, most of his notable work in astronomy was done elsewhere. Here he completed the reduction, and continued the series, of the observations made by his predecessor, Thomas James Henderson. In 1853, Smyth was responsible for installing the "time ball" on top of Nelson's Monument in Edinburgh to give a time signal to the ships at Edinburgh's port of Leith. By 1861, this visual signal was augmented by the One O'Clock Gun at Edinburgh Castle.
On his honeymoon in 1856 he made experimental observations on the peaks of Tenerife in the Canary Islands with a view to testing the astronomical advantages of a mountain observatory. The Admiralty awarded him a grant of £500 for the purpose and the yacht Titania. A fine 74 inch (1.88 m) equatorial telescope was placed at his disposal by friends. The purpose of the expedition was to verify Isaac Newton's surmise that "a most serene and quiet air... may perhaps be found on the tops of the highest mountains above the grosser clouds." The scientific results were detailed in reports addressed to the Lord Commissioners of the Admiralty, the Royal Society, and the Edinburgh Observations in 1858. He wrote a popular account of the voyage in Teneriffe, an Astronomers Experiment Smyth thus founded the first high-altitude observatory, pioneering the modern practice of placing telescopes at high altitudes for better observing conditions.
In 1871 and 1872 Smyth investigated the spectra of the aurora, and zodiacal light. He recommended the use of the rain-band for weather forecasting and discovered, in conjunction with Alexander Stewart Herschel, the harmonic relation between the rays emitted by carbon monoxide. In 1877-1878 he constructed at Lisbon a map of the solar spectrum for which he received the Makdougall Brisbane Prize in 1880. Smyth carried out further spectroscopic researches at Madeira in 1880 and at Winchester in 1884, pioneering the techniques of infrared astronomy by studying the heat emitted by the moon. He also researched wet collodion process photography.
In 1888 Smyth resigned as Astronomer Royal in protest at the chronic under-funding and age of the equipment at his facilities. This brought events to a head and the Royal Observatory was almost closed when James Linday, Earl of Crawford made a donation of new astronomical instruments and the complete Bibliotheca Lindesiana in order that a new observatory could be founded. Thanks to this donation, the new observatory Royal Observatory on Blackford Hill was opened in 1896. After his resignation, Smyth retired to the neighbourhood of Ripon, where he remained until his death.
Smyth subsequently published his book Our Inheritance in the Great Pyramid in 1864 (which he expanded over the years and is also titled The Great Pyramid: Its Secrets and Mysteries Revealed). Smyth claimed that the measurements he obtained from the Great Pyramid of Giza indicated a unit of length, the pyramid inch, equivalent to 1.001 British inches, that could have been the standard of measurement by the pyramid's architects. From this he extrapolated a number of other measurements, including the pyramid pint, the sacred cubit, and the pyramid scale of temperature.
Smyth claimed, and presumably believed, that the pyramid inch was a God-given measure handed down through the centuries from the time of Israel, and that the architects of the pyramid could only have been directed by the hand of God. To support this Smyth said that, in measuring the pyramid, he found the number of inches in the perimeter of the base equalled one thousand times the number of days in a year, and found a numeric relationship between the height of the pyramid in inches to the distance from Earth to the Sun, measured in statute miles. He also advanced the theory that the Great Pyramid was a repository of prophecies which could be revealed by detailed measurements of the structure. Working upon theories by Taylor, he conjectured that the Hyksos were the Hebrew people, and that they built the Great Pyramid under the leadership of Melchizedek. Because the pyramid inch was a divine unit of measurement, Smyth, a committed proponent of British Israelism, used his conclusions as an argument against the introduction of the metric system in Britain. For much of his life he was a vocal opponent of the metric system, which he considered a product of the minds of atheistic French radicals, a position advocated in many of his works.
Smyth, despite his bad reputation in Egyptological circles today, performed much valuable work at Giza. He made the most accurate measurements of the Great Pyramid that any explorer had made up to that time, and he photographed the interior passages, using a magnesium light, for the first time. Smyth's work resulted in many drawings and calculations, which were soon incorporated into his books Our Inheritance in the Great Pyramid, the three-volume Life and Work at the Great Pyramid (1867), and On the Antiquity of Intellectual Man (1868). For his works he was awarded a gold metal by the Royal Society of Edinburgh, but in 1874, the Royal Society rejected his paper on the design of Khufu's pyramid, as they had Taylor's. The rejection of his ideas helped contribute to his resignation from his post as Royal Astronomer in 1888.
The theories of Taylor and Smyth gained many eminent supporters and detractors in the field of Egyptology during the late 1800s, but by the end of the 19th century it had lost most of its mainsteam scientific support. The greatest blow to the theory was dealt by the great Egyptogist William Matthew Flinders Petrie, who had initially been a supporter. When Petrie went to Egypt in 1880 to perform new measurements, he found that the pyramid was several feet smaller than previously believed. This so undermined the theory that Petrie rejected it, writing "there is no authentic example, that will bear examination, of the use or existence of any such measure as a 'Pyramid inch,' or of a cubit of 25.025 British inches.