Smith went 6-10 this season and 8-24 over two years in charge of the team.
"After careful consideration, we informed Lovie that we have decided to make a change," Buccaneers co-chairman Joel Glazer said in a statement Wednesday night. "I want to thank Lovie for his hard work and dedication to the Buccaneers during his time here."
The Bucs will hold a news conference on Thursday afternoon to discuss Smith's dismissal.
Smith learned of the Bucs' decision via a phone conversation, a source told ESPN's Vaughn McClure.
"You don't hire a coach over the phone, so why would you fire him over the phone?" the source said.
Though the Bucs' coordinators and assistant coaches were not told of their fates as of Wednesday night, at least a couple had started cleaning out their offices, according to the source.
Bucs offensive coordinator Dirk Koetter is a candidate for the head-coaching job and will be interviewed, an NFL source told the Tampa Tribune.
One Bucs coach, when contacted by ESPN's Josina Anderson, said he was surprised by the news.
"Is this true?" said the coach, who wished to remain anonymous. "We all just met with Lovie individually today. This is strange. I wonder what happened."
Tampa Bay linebacker Lavonte David was more blunt in his reaction in a tweet that has since been deleted.
"This is stupid," he wrote. "We can't even have a consistent coach, 3 coaches in 5 yrs."
Defensive tackle Gerald McCoy also said he was taken aback.
"I don't know what to think right now," McCoy said. "I'm at a loss for words. I was just out driving, out getting some gas, and my phone started blowing up.
"It's 10 o'clock at night. I don't know what is going on. I've always loved Lovie. He's always been great to me and my family. I've never had a bad thing to say about him. I'm just at a loss for words. I honestly feel bad for my coach."
Smith had replaced Greg Schiano in January 2014, agreeing to a four-year contract.
"This decision was difficult on a variety of levels," Glazer said in the statement. "I am disappointed that we were not more successful these past few seasons, but we are committed to doing what is necessary to give our fans the winning team they deserve. As we move forward, General Manager Jason Licht will oversee the process for finding our next head coach."
Smith's hiring had been a homecoming; he was Tampa Bay's linebackers coach under Tony Dungy from 1996 to 2000.
"He is an outstanding coach and a great person,'' Tampa Bay defensive coordinator Leslie Frazier said of Smith. "I don't understand what happened."
The Bears fired Smith after the 2013 season after missing the playoffs for the fifth time in six seasons. He was 84-66 in nine seasons with Chicago.
Former Bears linebacker Lance Briggs, a seven-time Pro Bowler who said he would have considered finishing his career with Smith in Tampa had there been a need at his position, said he was shocked by the news.
"Other coaches keep their jobs, and Lovie gets fired," Briggs said. "Lovie gets the franchise quarterback, Tampa Bay is a playoff-contending team next year, and he gets fired. I'm disappointed in the decision to let him go."
Briggs did not play in 2015 after being limited to eight games for the Bears in 2014 before going on injured reserve because of a groin injury.
"Lovie's a championship coach," Briggs said. "He's a coach that will get you to a championship. It's unfortunate he wasn't given enough time to do that. You saw a team that improved throughout that season. The record might not have reflected it, but you saw improvement. You turn on the tape, and that team was starting to put itself in position to make that playoff run."
The Bucs showed some improvement this season with Winston at quarterback and running back Doug Martin, who was revitalized in 2015. But they lost their final four games after pulling into position to compete for a wild-card playoff berth.
For the first time, the Bucs ranked in the top 10 in total offense (No. 5) and defense (No. 10), but those numbers were deceptive. The Bucs struggled to get the ball into the end zone, ranking 20th in points. They were 26th in scoring defense, allowing 24 points or more 10 times.
The Bucs gained over 500 yards twice and averaged a team-record 375.9 yards per game. Martin finished second to Adrian Peterson for the NFL rushing title, and Mike Evans had another big year receiving, with 74 receptions for 1,206 yards but only three TDs.
Earlier this week, Smith reiterated his belief that the team is headed in the right direction.
"Our football team isn't a finished product yet, but I think it's safe to say that we're in pretty good shape going forward with [Winston] leading us, on and off the field," Smith said.
But the Bucs will move ahead without Smith, the team's third coach since Jon Gruden was fired after the 2008 season. Gruden led Tampa Bay to its only Super Bowl win; none of his successors had an overall winning record in Tampa.
Information from ESPN's Josina Anderson, Vaughn McClure, ESPN Stats & Information and The Associated Press was used in this report.