The former Rangers, Everton and Scotland manager has died at the age of 73.
Smith stepped up from assistant at Ibrox in 1991 when Souness moved to take over at Liverpool and went on to complete nine successive title wins among other successes in a period of Light Blue domestic domination.
Smith left in 1998 to manage Everton and then Scotland before returning to Ibrox in 2007 to take over the hot seat for another four years.
Murray took over the Ibrox club in 1988 and left in 2011.
The statement released to PA news media read: "Scottish football has lost one of its finest.
"Even in the proud history of Glasgow Rangers, Walter Smith stands out as a colossus. He will never be forgotten.
"His 21 titles and trophies between 1991 and 2011 not only earned respect in the Scottish and British game but across the entire footballing world.
"The Rangers family has lost someone very special.
"Walter had a profound effect on both of our lives - certainly as a manager and a leader and a wise and trusted adviser but always as a close and treasured friend. He made time for so many people.
"Both of us had spoken to him privately over the past few weeks. The topic rarely strayed from football.
"Our thoughts are with Ethel, Steven, Neil and their families."