The agency won the business following a competitive pitch. It will be responsible for raising awareness of the brand in the UK with a campaign due to launch later this year.
In the past Smyths Toys has worked with a number of agencies, including Underdog.
The retailer has 61 stores across the UK and Ireland and was established in 1987. The firm is Ireland’s biggest toy retailer.
Tony Smyth, the owner of Smyths Toys, said: "Following a hugely successful year for Smyths in 2012, we wanted to bring an agency on board to create a new and compelling brand idea to propel Smyths into our next phase of growth.
"We were greatly impressed by TBWA\Manchester’s insightful approach and enthusiasm for our brand."