The 12-year-old confirmed his place in the blue riband event after delighting connections in an “awesome” schooling session at trainer Nicholls’ Ditcheat base.
Smith said: “We were very pleased with him this morning. He went very well, jumped the fences beautifully and it’s all systems go.
“We hope he’s right back to top form and we wouldn’t run him unless he was at his best, so we feel he’s all set for Friday.
“It’s all been due to a tremendous effort from the yard. Clifford Baker, as usual, has been absolutely brilliant with him as has the physio.
“Donna Blake and Rosie Loxton have been looking after him all the time and Paul Nicholls of course has been overseeing the whole operation and doing it very well.”
It was feared Kauto Star would not attempt to regain his Gold Cup crown for a second time when it emerged he had suffered a schooling fall last month.
Nicholls was concerned about his condition after the tumble but after making massive strides in his recovery, Kauto Star was back on top form when enjoying a racecourse gallop after racing at Wincanton on Friday.
Connections were keen to see how he fared in another schooling session before confirming his participation, but after pleasing Nicholls and jockey Ruby Walsh, Kauto Star will try to add to his Cheltenham wins in 2007 and 2009.
Nicholls told his Betfair column: “We have given Kauto Star the green light for the Cheltenham Gold Cup after a very good schooling session on the grass this morning.
“Ruby came over to school him and Kauto was awesome, just as I’d thought he would be.
“He jumped six fences – the plain fence and the open ditch three times each - and he was foot perfect and looked magnificent.
“Barring any mishaps in the next few days, Kauto lines up for the Gold Cup at Cheltenham on Friday.
“We are looking forward to it.”
In contrast, Grands Crus will contest Wednesday’s RSA Chase rather than the Gold Cup.
Trainer David Pipe had been deliberating between the two options for his unbeaten novice, who was last seen when landing the Grade One Feltham Chase at Kempton over Christmas.
Connections had been tempted by the Gold Cup, but Pipe confirmed he will stick to the novice route for now.
He told At The Races: “We had a chat with the owners and the defining thing is you have to do what is right for the horse and in our opinion at this stage of his career the RSA is the right race for him.
“It’s what we thought for him as an individual. I’m sure he could cope with the Gold Cup, but hopefully we might be going there next year.
“You’re always going into unknown territory, but Tom Scudamore was confident of him getting the Gold Cup trip.
“It’s a decision we’ve made for the horse and the best for him. He’s in good form, he’s had a good preparation and we wish the race was today.
“Unfortunately Grands Crus and Tom parted company schooling the other day, but all was OK afterwards. Tom schooled him on Sunday and he jumped well.
“You never want these things to happen but they do and he was fine afterwards.”