The iconic Lee-Enfield rifle, the SMLE Mk III, was introduced on January 26, 1907, and featured a simplified rear sight arrangement and a fixed, rather than a bolt-head-mounted sliding, charger guide. The design of the handguards and the magazine were also improved, and the chamber was adapted to fire the new Mk VII High Velocity spitzer .303 ammunition. Many early model rifles, of Magazine Lee Enfield (MLE), Magazine Lee Metford (MLM), and SMLE type, were upgraded to the Mk III standard. These are designated Mk II Cond, with various asterisks denoting subtypes.

During World War I, the standard SMLE Mk III was found to be too complicated to manufacture. Demand was outstripping supply, and in late 1915, the Mk III* was introduced, which incorporated several changes, the most prominent of which were the deletion of the magazine cut-off, and the long range volley sights. The windage adjustment capability of the rear sight was also dispensed with, and the cocking piece was changed from a round knob to a serrated slab. Rifles with some or all of these features present are found, as the changes were implemented at different times in different factories and as stocks of preexisting parts were used. The magazine cut-off was reinstated after WWI ended, and not entirely dispensed with until 1942.

The inability of the principal manufacturers (RSAF Enfield, Birmingham Small Arms, and London Small Arms) to meet military production demands led to the development of the "peddled scheme", which contracted out the production of whole rifles and rifle components to several shell companies, leading to a minor political scandal.

The SMLE Mk III* (redesignated Rifle No.1 Mk III* in 1926) saw extensive service throughout World War II as well, especially in the North African, Italian, Pacific and Burmese theatres in the hands of British and Commonwealth forces. Australia and India retained and manufactured the SMLE Mk III* as their standard-issue rifle during the conflict, presumably due to familiarity with the design and ease of production, and the rifle remained in Australian military service through the Korean War, until it was replaced by the L1A1 SLR in the late 1950s. The Lithgow Small Arms Factory finally ceased production of the SMLE Mk III* in 1953.

The infant National Army of Ireland adopted the SMLE as their service rifle upon the foundation of the state in 1922. Captured examples had already seen widespread service with the Irish Republican Army during the War of Independence. The weapon was used by both sides during the Civil War period, and examples were still being used by the IRA during the 1950s, 60s and 70s.