He is most noted for commanding the 1st Marine Division during the first year of the Korean War, and notably during the Battle of Chosin Reservoir, where he said "Retreat, Hell!

Ordered to sea duty in October 1921, Lieutenant Smith served as commanding officer of the Marine Detachment aboard the USS Texas (BB-35) until May 1924.

Following his return from foreign shore duty in June 1931, he became a student at the Field Officer's Course, U.S. Army Infantry School, Fort Benning, Georgia.

He returned to the United States in August 1936, and joined the staff of the Marine Corps Schools at Quantico, as an instructor in the S-3 Section, (Operations and Training).

Smith became Marine deputy chief of staff of the Tenth Army in November 1944, and participated in the Battle of Okinawa from April through June 1945.

Smith and the Marine command also felt Almond was too aggressive and were sure about large numbers of Chinese Forces in North Korea when higher headquarters in Tokyo was telling them that was not the case.

In November 1950, with the 1st Marine Division surrounded at the Chosin Reservoir, he directed the breakout and subsequent 70 miles (110 km) march to the seaport of Hungnam.

In the end his careful march north and ability to keep the division together saved it—and quite possibly the entire X Corps—from total destruction.

Citation: The President of the United States of America, under the provisions of the Act of Congress approved July 9, 1918, takes pleasure in presenting the Distinguished Service Cross to Major General Oliver P. Smith (MCSN: 0–920), United States Marine Corps, for extraordinary heroism in connection with military operations against an armed enemy of the United Nations while serving as Commanding General, FIRST Marine Division (Reinforced), in action against enemy aggressor forces in the vicinity of the Chosin Reservoir, Korea, from 29 November to 4 December 1950.

Major General Smith's leadership contributed materially to the break-through in the Chosin Reservoir area and is in keeping with the highest traditions of the military service.