Smith managed 35 combined tackles and a pass defensed through 12 games and five starts with the 49ers last year but struggled to stay on the field as he dealt with an Achilles injury. It was nothing serious enough to end his season but did impact his performance.
Smith missed all of the 2017 season, his first with the 49ers, after suffering a torn pectoral muscle during training camp.
Shanahan commented on the decision to release Smith, who was initially supposed to be a key player on defense as the new regime got to work rebuilding the roster.
"Malcolm has handled himself with class the whole time," Shanahan said on Tuesday. "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'll always have a ton of respect for."
Smith became less significant to the 49ers' future thanks to some recent offseason additions. San Francisco drafted Fred Warner last year and Dre Greenlaw this year. The team also added Kwon Alexander to the revamped group of linebackers.
"It definitely shows that we have confidence in the other guys," Shanahan commented. "Malcolm is a guy that I have a ton of respect for. I played (against) him a ton in my career when he was at Seattle and when he was at Oakland. He's a guy I've always hated playing against. I've hated going against him in practice.
"I think he had an unfortunate time here, especially the first year. We brought him in to be our backer, and he was. He had a great camp, and then he tore his peck and missed a whole year. The next year, we got Fred, and he got that opportunity."
Shanahan notes that Smith's departure doesn't mean Greenlaw is the definitive starter at the SAM linebacker spot.
"It means we feel good about him being that, and we also feel good about other guys," Shanahan said. "If we didn't feel good about more than one guy, then it would have been hard to let Malcolm go when we did."
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