At stumps, England were 23/1, still trailing by 474 runs with three days of play remaining.
Returning to the team after being out with a concussion injury he picked up in the first innings of the second Test, Smith showed the world why he recently surpassed Virat Kohli as the best Test batsman in the ICC rankings despite being away from the game for one year due to his role ball tampering with a scintillating 211 from 319 balls, his more than seven-hour stay at the crease decorated with 24 fours and two sixes.
Smith had scored his previous two double tons in 2015 and 2017, both against England.
Smith, whose lowest score in this series is 92 at Lord's prior to which he had scores of 144 and 142, brought up his double century off 310 balls by whipping a full delivery from Craig Overton past mid-on. Smith also became the first Australian since Allan Border in 1981-85 to score 500+ runs in consecutive Ashes series in England.
The 30-year-old former captain roared and punched the air as all the boos he had received throughout the series from the English fans drowned in applause.
Smith shared a 145-run sixth wicket stand with skipper Tim Paine who himself scored 58 before Overton got his wicket.
Mitchell Starc, playing his first match, also scored a 54 not out along with Nathan Lyon who was unbeaten on 26 when the Aussies declared.
But the day belonged to Smith who made the most of a number of lucky reprieves to march on.
Smith was on 118 when he was caught by Ben Stokes at slip off left-arm spinner Jack Leach only for the delivery to be called a no ball by the video officials.
Earlier in the first session, Archer grassed a caught and bowled opportunity after his full toss was driven straight back at him.
But those aside, Smith showed his mettle in full tilt to continue his prolific run-scoring spree and bring up his third Ashes century in 160 balls by clipping Overton off his pads for a couple of runs.
Post lunch, Smith continued in the same vein as he got to his 150, his eighth such score in Tests and third against England by hitting Archer for three runs.
After scoring his hundred, Smith raised his bat as his teammates in the dressing room applauded in a fashion which showed the inevitability of yet another landmark from this run-machine, who returned to the team on the back of a concussion injury.
Earlier, a light drizzle once again played spoilsport in the first session, but it was for a short while as the packed crowd at Old Trafford were treated to another Smith special.
Overnight batter Travis Head was the first wicket for England as Stuart Broad (3/47) trapped him in front.
Mathew Wade (16) played a poor shot to be caught at mid-on by England captain Joe Root. But Smith, at the other end, was batting at another level as he negotiated left-arm spinner Jack Leach's spinning deliveries well and showed superb technique against Broad and Overton to work his way through.
England lost Joe Denly, opening for the first time with Jason Roy pushed down, for just 4 with Pat Cummins taking his wicket. Rory Burns was batting on 15 with nighwatchman Overton on 3.
For England in the first innings, Broad was the pick of the bowlers with figures of 3/97.
Brief scores: Australia 1st innings: 497/8decl (Steve Smith 211, Marnus Labuschagne 67; Tim Paine 58, Mitchell Starc 54 not out; Stuart Broad 3/97); England 23/1.
( With inputs from IANS )