Smith, who will turn 34 this month, would have counted for $4.375 million against the cap, and Canty, 33, had a $2.9 million cap number.
Smith was the team's leading tackler in 2015 but showed signs of slowing down toward the end of the season and started sharing playing time with Zachary Orr.
The 33-year-old Smith had two years remaining on his deal and was scheduled to earn $3.5 million in 2016.
"While we are releasing Daryl, we are not closing the door on the possibility of him returning to the Ravens," General Manager Ozzie Newsome said in a statement. "He deserves an opportunity to see his market value at this time.
"With 'Buck,' you're talking about one of the NFL's highest-quality people. We have been fortunate to have him with the Ravens, and his production has been outstanding."
Ravens coach John Harbaugh credited Smith with helping the team make a smooth transition after losing Ray Lewis in 2013.
"We have been blessed to have a person like Daryl Smith on our team," Harbaugh said in a statement Thursday. "He has been a steady and intelligent player with grit. ... His numbers speak for themselves."
Smith made over 120 tackles in each of his three seasons in Baltimore. The Ravens will look to Orr, Arthur Brown or Albert McClellan to replace Smith, or they will address this void in the draft (Baltimore has the No. 6 overall pick and could use it on UCLA's Myles Jack).
Canty made only 19 tackles (the second-fewest of his career) and had one sack last season. He missed seven games due to calf and pectoral injuries, which led to him finishing the season on injured reserve.