A smoothing operator for a unitary representation π:G→U(ℋ) of a (possibly infinite dimensional) Lie group G is a bounded operator A:ℋ→ℋ whose range is contained in the space ℋ∞ of smooth vectors of (π,ℋ). Our first main result characterizes smoothing operators for Fréchet–Lie groups as those for which the orbit map πA:G→B(ℋ),g↦π(g)A is smooth. For unitary representations (π,ℋ) which are semibounded, i.e. there exists an element x0∈𝔤 such that all operators idπ(x) from the derived representation, for x in a neighborhood of x0, are uniformly bounded from above, we show that ℋ∞ coincides with the space of smooth vectors for the one-parameter group πx0(t)=π(exptx0). As the main application of our results on smoothing operators, we present a new approach to host C∗-algebras for infinite dimensional Lie groups, i.e. C∗-algebras whose representations are in one-to-one correspondence with certain continuous unitary representations of G. We show that smoothing operators can be used to obtain host algebras and that the class of semibounded representations can be covered completely by host algebras. In particular, the latter class permits direct integral decompositions.