Smith founded the club in 1950 and devoted most of his life nurturing the club. The Amateurs produced many great players down through the years, including Sir Alex himself.
Drumchapel Amateurs' director, Archie Rankin, was the driving force behind the portrait going to the Museum.
Smith, who died in 2004, ensured "The Drum" provided an excellent learning ground for so many who went on to achieve greatness in football.
Among the many players to come through the ranks include Sir Alex, David Moyes, Walter Smith, Andy Gray, John Robertson, Archie Gemmill, Asa Hartford, John Wark and many, many more.
Sir Alex said: "Douglas Smith was a very special man. He was also a very important man to Scottish football. He was responsible for so many great players progressing from Drumchapel Amateurs to the professional ranks.
"He has the wonderful knack of making you feel important, both to him and to the club. I was playing with Harmony Row Boys' Club in Govan when he came to the door asking me to go and play for Drumchapel.
"I wasn't too sure but my father had no doubt that Drumchapel Amateurs would help me progress in the game. I turned up to play and was given a green and white jersey to play in. When I asked why the club had chosen green, Douglas said it was because they were the cheapest jerseys he could buy!
"In one year, from the four teams the club ran, no fewer than 35 players went on to senior clubs. A quite remarkable figure. But then, Douglas Smith was a quite remarkable man."
SFA president Campbell Ogilvie said: "Douglas Smith was a visionary. Drumchapel Amateurs produced more than 20 Scottish international players. We are both delighted and proud that this magnificent portrait is hanging in the Scottish Football Museum."
Scottish Football Museum curator Richard McBrearty explained: "The role of the Museum is to promote the rich history of football in Scotland by displaying objects and memorabilia which help to tell the story. Tens of thousands of visitors from across Scotland and further afield visit the museum each year. The inclusion of this portrait of Douglas Smith in our exhibition space makes a very important contribution to the story we have to tell.
"We have to thank Sir Alex Ferguson and Archie Rankin of Drumchapel Amateurs for bringing the portrait to the Museum. Archie, in particular, suggested from the outset that the Museum at Hampden was the best place for it as it would help to recount the inspirational story of Douglas Smith and of Drumchapel Amateurs to a large audience for years to come. We are delighted that his idea has now become a reality."
Drumchapel Amateurs' director, Steve Britton, OBE, commented: "Douglas made the club probably the best-known amateur club in Scotland outwith Queen's Park. It seems fitting that his portrait now hangs in the Scottish Football Museum, the home and history of our national sport. We are honoured that a former player of the stature of Sir Alex Ferguson came back to Scotland especially to unveil the picture.
"Many of our boys made it to the senior ranks but, thanks to Douglas, we like to think that every single player left with a good set of values to take with them on life's path."
The portrait was painted by Scottish artist Denis Lavery.