In 1790, he applied for permission to serve in the Royal Swedish Navy in the war between Sweden and Russia. King Gustav III appointed him to command the light squadron and to be his principal naval adviser. Smith led his forces in clearing the Bay of Viborg of the Russian fleet, known as the Battle of Svensksund (Finnish: Ruotsinsalmi, Russian: Rochensalm). The Russians lost sixty-four ships and over a thousand men. The Swedes lost four ships and had few casualties. For this, Smith was knighted by the king and made a Commander Grand Cross of the Swedish Svärdsorden (Order of the Sword). Smith used this title, with King George III's permission.