In creating The Smart Set, Mann initially sought to offer a cultural counterpart to his Town Topics, a preceding gossip magazine which he used for political and social gain among New York City's elite, which would include works "by, for and about 'The Four Hundred'”. With The Smart Set, Mann wanted to provide sophisticated content that would reinforce the social values of New York’s social elite. He gave it the subtitle "The Magazine of Cleverness." He published the first issue of The Smart Set on March 10, 1900, under the editorship of Arthur Grissom, who also worked at Town Topics. As editor, Grissom created the formula of the magazine that would remain intact throughout the greater part of its existence: 160 pages containing a novelette, a short play, several poems, and witticisms to fill blank spaces. Grissom died of typhoid fever a year later, and Marvin Dana took over as editor, in the first of a series of managerial turnovers that would define the evolution of magazine until its termination. Dana remained as editor until 1904, when he left The Smart Set to work in newspapers.
His replacement, Charles Hanson Towne, was the magazine’s first editor to actively push to publish new literary talents, such as O. Henry and James Branch Cabell. Under Towne’s editorship, the magazine reached its peak circulation of 165,000 in 1905. However, as a result of allegations of blackmail associated with Mann’s Town Topics in 1906, The Smart Set’s popularity began to decline, and it immediately lost around 25,000 readers. Dissatisfied with the magazine’s direction, Towne resigned his position as editor in 1908 to work with Theodore Dreiser on The Delineator. After Towne’s departure, Colonel Mann stepped up as editor alongside Fred Splint, and the two quickly set out to revitalize the magazine in order to rebuild its readership. As part of this revitalization, Mann started a monthly book review column, and Splint hired the Baltimore newspaperman Henry Louis Mencken to fill the position. Soon after, in 1909, George Jean Nathan became the magazine’s drama columnist. Mencken and Nathan eventually ensured the magazine’s place in literary history.