By 60 per cent to 40 per cent, GMB members voted to endorse Smith over Corbyn,
The GMB union represents workers on the Trident nuclear programme.
Corbyn has repeatedly voiced his view that renewal of the nuclear programme should not go ahead and the deterrent should be scrapped, with the GMB concerned over its workers' job security.
Tim Roache, GMB general secretary said: “The Labour party is at a crossroads. I’m under no illusions that we’re living through dangerous political times – the like of which I haven’t seen during my three decades in our movement. It's time for us to face up to reality.
GMB balloted our members because this kind of decision shouldn’t be taken from up on high. We’re a democratic organisation here to serve our members’ interests. I was determined that our members would have their say. And they've had it.
I’ll proudly campaign alongside Owen in the coming weeks and months to deliver on his pledges to end the public sector pay freeze, to support defence workers, to invest in health and industry, and to build an industrial strategy – these are bread and butter issues for the people I represent.
"But we can only tackle them if we’re in government. That’s the end game and I hope whatever the final result, the Labour party will unite when all this is over. GMB members cannot afford for Labour to be talking to itself in a bubble for the next five years while the Tories run riot through our rights at work, our public services and our communities."
Smith has already won the backing of Usdaw, the shopworkers' union.
However, Corbyn is supported by the CWE, Aslef and UCATT.
The most recent polling puts Corbyn overwhelmingly ahead of Smith, with bookies also fancying the incumbent.
Corbyn was also given a boost this week after a court ruling that all new members will be able to take part in the leadership election.
The case was sparked after Labour's National Executive Committee decided that full members could not vote in the leadership election between Jeremy Corbyn and Owen Smith if they had not had at least six months' continuous membership up to 12 July - the "freeze date".
In order to vote members would have had to make a payment of £25 between 18 and 20 July. However, after the result all new members can vote on the outcome.