Niemann carded a stellar seven-under 65 on Sunday at The Grange to pip Mexican duo Abraham Ancer and Carlos Ortiz by two shots.
Niemann (13 under) was the only golfer not to record a last-round bogey and collected the $US4 million winner's cheque.
Smith (one under) and his fellow Australians - Marc Leishman (three under), Lucas Herbert (even) and Matt Jones (three over) - failed to successfully defend their Adelaide team title for Ripper GC.
The Australians combined for a one-under total, a whopping 21 strokes behind the winning team, Fireballs GC, captained by Spanish great Sergio Garcia.
Smith tied for 30th after sharing 25th place in LIV's season opener in Saudi Arabia a week ago.
And he felt drained by off-course commitments at an Adelaide tournament shifted from its late-April slot in previous years.
"The last couple of years we've come in pretty fresh and these boys (his teammates) have had a couple of weeks off and I've come off the Masters with a week off in between," Smith said.
"So I've had time to get here and get settled and then get ready for a big week.
"Whereas this week it was kind of all just thrown in front of us very quickly, and coming from Riyadh, being jet-lagged and stuff, it definitely took a lot out of us.
"But it's taken a lot out of us the last couple years as well, just not being as fresh, and then the extra work.
"Everyone was kind of dragging a little bit, but it is what it is."
Niemann had no such worries, firing seven birdies in his blemish-free round.
"I knew I needed to do something special," said Niemann, who also won the 2023 Australian Open.
"It just went my way."
Ancer led for much of the final round, but finished with two bogeys.
"Obviously the last two holes were rough to finish with bogey-bogey ... but I think it's just fuel for the rest of the season," he said.
Spain's David Puig (nine under) took third place ahead of Richard Bland (eight under) and former world No.1 Jon Rahm (seven under).
Niemann's triumph before crowds topping 100,000 over the three days came as Adelaide secured host-city rights for a LIV Golf tournament until 2031.
The event will remain at The Grange until 2028, before shifting to a city course redeveloped by Greg Norman.
Norman will oversee the re-design of the current North Adelaide golf course on the fringe of Adelaide's central business district.
Adelaide's contract to host had been due to expire next year, which will be the fourth LIV tournament in the SA capital.
But amid other Australian cities pitching interest to host, SA Premier Peter Malinauskas secured an extension.
Norman spent two days during the week assessing the lay of the North Adelaide land, which lines the River Torrens and has three public courses - a championship-length par-72, a shorter par-68, and a par-3 course.
"As a golf course designer you very seldom get the opportunity to be involved with a project downtown," Norman said.
"North Adelaide Golf Club is basically a diamond in the rough and we're going to unpick it."
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