Smith was already comfortably within the top on the medium tyres, but switched to the softs with 10 minutes remaining in the session.
During his final salvo, he posted a time of 1m 33.179s, 0.19s of the next best of Lorenzo, as both riders went below Marc Marquez’ track record from 12 months ago.
Bizarrely, Smith fell at turn 13 shortly afterwards when following Aleix Espargaro, who also went down on that part of the circuit. Moments earlier Pol Espargaro had gone down at turn nine.
That commotion drew the attention away from Lorenzo and third placed Andrea Dovizioso, who was another 0.374s down on Smith’s pace.
Cal Crutchlow on the LCR Honda 0.473 gave Britain a second representative in the top four with another fine display.
Last year’s winner Marquez was in place having spent large parts of the session testing the soft rear Bridgestone.
The 22-year-old Spaniard was two hundreds of a second ahead of Championship leader Valentino Rossi, who spent most of the session on the mediums.
Dani Pedrosa, in his first race back since undergoing arm surgery, was in seventh.
The Spaniard started the session well off the pace in 15th place, but showed steady improvement to finish comfortably in the top 10.
The Espargaros Pol and Aleix were eighth and ninth, with Yonny Hernandez founding out the top 10.
Eleventh place belonged to Andrea Iannone, who took the track after taking a pain-killing injection having crashed injury.
Second Practice Session Times:
1. Bradley Smith GBR Monster Yamaha Tech 3 (YZR-M1) 1m 33.179s [Lap 18/19] 307km/h (Top Speed)
2. Jorge Lorenzo ESP Movistar Yamaha MotoGP (YZR-M1) 1m 33.369s 0.190s [4/18] 306km/h
3. Andrea Dovizioso ITA Ducati Team (Desmosedici GP15) 1m 33.553s 0.374s [11/22] 310km/h
4. Cal Crutchlow GBR CWM LCR Honda (RC213V) 1m 33.652s 0.473s [16/19] 307km/h
5. Marc Marquez ESP Repsol Honda Team (RC213V) 1m 33.670s 0.491s [16/21] 309km/h
6. Valentino Rossi ITA Movistar Yamaha MotoGP (YZR-M1) 1m 33.686s 0.507s [19/23] 305km/h
7. Dani Pedrosa ESP Repsol Honda Team (RC213V) 1m 33.725s 0.546s [18/18] 308km/h
8. Pol Espargaro ESP Monster Yamaha Tech 3 (YZR-M1) 1m 33.903s 0.724s [18/18] 307km/h
9. Aleix Espargaro ESP Team Suzuki Ecstar (GSX-RR) 1m 33.944s 0.765s [13/18] 296km/h
10. Yonny Hernandez COL Pramac Racing (Desmosedici GP14.2) 1m 33.953s 0.774s [16/18] 305km/h
11. Andrea Iannone ITA Ducati Team (Desmosedici GP15) 1m 34.092s 0.913s [17/17] 309km/h
12. Maverick Viñales ESP Team Suzuki Ecstar (GSX-RR) 1m 34.110s 0.931s [15/16] 301km/h
13. Jack Miller AUS CWM LCR Honda (RC213V-RS) 1m 34.253s 1.074s [16/19] 300km/h
14. Scott Redding GBR Estrella Galicia 0,0 Marc VDS (RC213V)1m 34.371s 1.192s [20/22] 304km/h
15. Stefan Bradl GER Athina Forward Racing (Forward Yamaha) 1m 34.543s 1.364s [19/19] 302km/h
16. Danilo Petrucci ITA Pramac Racing (Desmosedici GP14.1) 1m 34.568s 1.389s [18/18] 299km/h
17. Nicky Hayden USA Aspar MotoGP Team (RC213V-RS) 1m 34.663s 1.484s [16/19] 296km/h
18. Hector Barbera ESP Avintia Racing (Desmosedici GP14 Open) 1m 34.745s 1.566s [4/14] 310km/h
19. Loris Baz FRA Athina Forward Racing (Forward Yamaha) 1m 35.002s 1.823s [11/18] 295km/h
20. Mike Di Meglio FRA Avintia Racing (Desmosedici GP14 Open) 1m 35.067s 1.888s [6/14] 305km/h
21. Karel Abraham CZE Cardion AB Motoracing (RC213V-RS) 1m 35.090s 1.911s [15/18] 297km/h
22. Alvaro Bautista ESP Factory Aprilia Gresini (RS-GP) 1m 35.137s 1.958s [14/16] 297km/h
23. Eugene Laverty IRL Aspar MotoGP Team (RC213V-RS) 1m 35.182s 2.003s [16/20] 296km/h
24. Alex De Angelis RSM Octo IodaRacing (ART) 1m 35.938s 2.759s [5/13] 290km/h
25. Marco Melandri ITA Factory Aprilia Gresini (RS-GP) 1m 36.056s 2.877s [4/18] 296km/h