According to ESPN's Adam Schefter, Smith will be released on Thursday, ending his 13-year tenure with the team that drafted him in the third round of the 2001 draft.
Smith will be designated a post-June 1 cut to save $1 million under the cap in 2014. They still will owe the team's all-time leading receiver $3 million in guaranteed salary and $2 million in deferred bonus.
The Panthers also are one of three teams in the running for Cincinnati Bengals offensive tackle Anthony Collins. The Bengals and Tampa Bay are the other teams who reportedly have offered comparable money.
Entering the third day of free agency, the Panthers were one of seven NFL teams that had not signed a player from another team. Most of the focus has been on Smith.
Smith's agent, Derrick Fox, said on Wednesday that his client won't play for Carolina next season, saying it's only a matter of time before he's traded or cut.
Fox said the damage done by the comments from general manager Dave Gettleman, as well as the lack of communication from the team, was "irreparable."
So with Smith headed out, the Panthers will focus on building for 2014. Gettleman, Collins aside, is looking for bargains.
Here is a look at what's happening with Carolina's own free agents:
Wide receiver Ted Ginn Jr.: Visited with Tampa Bay; interest from Cleveland.
Wide receiver Domenik Hixon: Interest from Chicago.
Free safety Mike Mitchell: Signed with Pittsburgh
Linebacker Jordan Senn: Signed with Chicago
Tight end Ben Hartsock; linebacker Dan Connor; cornerback Drayton Florence; quarterback Derek Anderson; quarterback Jimmy Clausen; defensive tackle Colin Cole; strong safety Quintin Mikell; offensive lineman Chris Scott; guard Travelle Wharton; linebacker Jason Williams.