Smith, who is back in action after serving a one-year ban for his role in the ball-tampering scandal, has been made the leader of the team once again. The announcement was made ahead of Royals' clash against Mumbai Indians here.
The hosts, who have lost six out of their eight games, need to win at least five of their remaining six matches to have any chance of making the play-offs.
Smith was also named captain before the start of the 2018 edition but in the wake of the ball-tampering incident, it was decided that Rahane would lead the team in the Australian's forced absence.
"Rajasthan Royals will be led by the Australian batsman Steven Smith for the upcoming matches of the IPL. Ajinkya Rahane did a fantastic job in leading the team to the playoffs last year, however, the franchise now thinks a fresh approach is needed to bring their 2019 campaign back on track.
"Steve has always been part of the leadership team within RR and Rahane will continue to be a key voice in the side, therefore the Royals see this as a small restructuring process to secure the results required to move up the table," said the team in a statement.
However, Smith is expected to be available until May 1 but by then, the team would have played majority of its league games.
Star players Ben Stokes and Jos Buttler would also be leaving next week to join England's World Cup camp.
Smith has made 186 runs in seven games at 37.20 with 73 being his highest.
Rahane, on the other hand, has scored 201 runs at 25.12 including a top-score of 70.