Smith, who was said to be upset with the losing in Carolina and the overall direction of the team, has come to grips with where the organization is heading, including the drafting of Cam Newton.
Smith, who turned 32 this year, was said to be a target of several teams needing receiver help.
At one point, the Panthers were considering dealing Smith, according to the source, but that has subsided in the past few days as Smith has grown to accept where he is with the team.
Smith would headline a young receiver group that will include three second-year players.
Some scouts said they thought Smith was just going through the motions because of his frustration with losing in 2010, but the source said Smith is encouraged by the direction of the team now.