Smith had come under increasing pressure from the home support after a dismal run where Reds slipped from the top of the Dr Martens Premier Division to mid-table ninth, 19 points off leaders Tamworth.
Smith was in his second spell at the Broadfield Stadium, after originally joining the club in 1997 as co-manager with the then chairman John Maggs.
He took full charge the following season, before leaving when financial troubles sent the club into administration. He subsequently returned when the Duly family took over.
Reds did enjoy brief headlines in the FA Cup this season, attracting over 4,000 fans for their 2-1 Second Round loss to Conference side Dagenham & Redbridge.
However, cup success was proving to be an unwanted distraction from an already struttering league campaign, highlighted by the fact that Crawley's last Dr Martens win came over two months ago against Moor Green on November 2.
Smith's decision came on the back of yet another loss, this time in the FA Trophy to Ryman league Hayes.
Reserve Team coach Francis Vines has been given caretaker duties, with the club imposing a January 31 deadline on all interested applicants.