This whitepaper from the IOTA Foundation introduces IOTA Smart Contracts (ISC), a novel framework for building scalable, multi-chain distributed ledger technology. ISC aims to overcome the limitations of traditional blockchains by anchoring multiple layer-2 blockchains to the IOTA Tangle on layer-1. This approach enables parallel processing of smart contracts while retaining cross-chain composability and trustless asset transfers using IOTA's feeless UTXO ledger. The document outlines the architecture, goals, validation incentives, and security considerations of ISC, including its advanced tokenisation features and the use of a virtual machine for executing smart contracts on individual chains.