The team announced Tuesday that Smith was released to create a roster spot for wide receiver Nick Williams. After injuries to receivers Jalen Hurd, Dante Pettis and Trent Taylor, the 49ers needed depth at wideout for Thursday's preseason finale against the Los Angeles Chargers.
"[Smith] is a guy I've always hated playing against," 49ers head coach Kyle Shanahan told reporters. "I think he had an unfortunate time here, especially the first year. We brought him in to be our 'backer and he was.
"Malcolm has handled himself with class the whole time, but I know it didn't go the way he wanted it to nor how we expected it. But he was always the player we thought he was and the person. He's a guy I will always have a ton of respect for."
Smith signed a five-year, $26.5 million contract with the 49ers in March 2017. He was expected to serve in a key veteran role with the team's defense, but multiple injuries derailed his career in San Francisco.
In two seasons with the franchise, Smith appeared in only 12 games. He suffered a torn pectoral early in his first training camp with the 49ers, an injury that forced him to miss the entire 2017 campaign.
The 30-year-old linebacker returned in 2018 but was slowed by Achilles tendinitis and hamstring problems for a majority of the season. He recorded 35 total tackles and one pass breakup in five starts last year.
Smith was named Most Valuable Player of Super Bowl XLVIII as a member of the Seattle Seahawks. He played four seasons with the Seahawks (2011-14) before spending two years with the Oakland Raiders (2015-16).