Driving his first race at age 19, Smiley was an accomplished road racer. He raced SCCA Formula Ford, Formula Atlantic (SCCA Formula B), Can-Am, Formula 5000 and Formula Super Vee, winning in each series while setting 25 track records, winning the SCCA National Championship four times prior to turning pro in 1974.
In 1979, he raced in the British Formula One Series (sometimes called the "Aurora Formula One Series") for the Surtees Team, and in 11 races he had eight top-10 finishes, including a win, which is the last by an American in an FIA sanctioned event, at Silverstone, England in 1979. He also disputed the F1 non-championship 1979 Race of Champions in Brands Hatch, finishing 10th with a Tyrrell.
Smiley raced in the Indianapolis 500 twice, in 1980 and 1981, and was killed while trying to qualify for a third in 1982.
In the 1980 Indianapolis 500, Smiley qualified Patrick Racing's Valvoline Phoenix/Cosworth in 20th position. His race ended when the turbocharger blew on lap 47, causing him to finish 25th. In the 1981 Indianapolis 500, Smiley qualified the Patrick Racing Intermedics Wildcat VIII/Cosworth, qualifying 8th and led 1 lap, but finishing 22nd after a crash on lap 141. His crash set up the controversial finish to the Indy 500 between teammate Mario Andretti and Bobby Unser.
After the 1981 CART season ended, Smiley was released from Patrick Racing, but was essentially traded to a Patrick-affiliated ride, Fletcher Racing.
In 1982, record speeds were being set during qualification for the 1982 Indianapolis 500. Both Kevin Cogan and Rick Mears set new single lap and 4-lap records in their attempts.
Smiley went out for a qualifying attempt an hour later. On the second warm up lap his car began to oversteer while rounding the third turn, causing the car to slightly slide. When Smiley steered right to correct this, the front wheels gained grip suddenly, sending his car directly across the track and into the wall nose first at nearly 200 mph (320 km/h). The impact shattered and completely disintegrated the March chassis, causing the fuel tank to explode, and sent debris, including Smiley's exposed body, into the catch fence and then back onto the track, tumbling hundreds of feet across the short-chute connecting turns 3 and 4. Smiley died instantly from massive trauma inflicted by the severe impact. His death was the first at Indy since 1973 when Art Pollard and Swede Savage were killed, and to date, the last driver to die during qualifying.
Smiley's funeral was held on May 20, 1982 and he was buried in his birth location in Nebraska.
CART medical director Steve Olvey, who was on staff at the time, discussed the crash in his 2006 autobiography, Rapid Response: My Inside Story as a Motor Racing Life-Saver:
"During an attempt to qualify for the Indy 500, Gordon Smiley, a cocky young driver from Texas, was determined to break 200mph or die trying. Several veteran drivers...had warned him that he was in way over his head, driving all wrong for the Speedway. Smiley was a road racer and was used to counter-steering his car to avoid a crash if the rear wheels broke traction. While rushing to the car, I noticed small splotches of a peculiar gray substance marking a trail on the asphalt leading up to the driver. When I reached the car, I was shocked to see that Smiley's helmet was gone, along with the top of his skull. He had essentially been scalped by the debris fence. The material on the race track was most of his brain. His helmet, due to massive centrifugal force, was literally pulled from his head on impact...I rode to the care center with the body. On the way in I performed a cursory examination and realized that nearly every bone in his body was shattered. He had a gaping wound in his side that looked as if he had been attacked by a large shark. I had never seen such trauma."