During this same time, Smedley also became involved with a number of Bengali Indian revolutionaries working in the United States, including M. N. Roy and Sailendranath Ghose. Working to overthrow British rule in India, these revolutionaries saw World War I as an opportunity for their cause, and began to cooperate with Germany, which saw in the revolutionaries' activities an opportunity to distract Britain from the European battlefront. The cooperation between the revolutionaries and Germany became known as the Hindu-German Conspiracy, and the United States government soon took action against the Indians. Roy and Ghose both moved to Mexico, and recruited Smedley to help coordinate the group's activities in the United States during their absence, including operating a front office for the group and publishing anti-allied propaganda. Most of these activities continued to be funded by Germany. Both American and British military intelligence soon became interested in Smedley's activities. To avoid surveillance, Smedley changed addresses frequently, moving ten times in the period from May 1917 to March 1918, according to biographer Ruth Price. More important in terms of the Indian Nationalist movement was the work Smedley did in New York for the leading nationalist in exile in New York, Lala Lajpat Rai. Smedley became his secretary and wrote regularly for his influential journal, The People, until his death in 1928. Rai was known as the Lion of the Punjab and Smedley worked with him closely to win support among the leading progressives in New York like Roger Baldwin and Margaret Sanger forming Friends of Freedom for India as an advocacy group that was of lasting importance. Smedley also became a significant local journalist writing about prison conditions for The Call, a socialist daily edited by Robert Minor.
With the support of the Danish writer, Karin Michaelis, in 1928, she finished her autobiographical novel Daughter of Earth. She then left Chattopadhyaya and moved to Shanghai, initially as a correspondent for a liberal German newspaper. Daughter of Earth was published in 1929 to general acclaim.