The SFA confirmed Smith's departure – a decision which has been met with shock by his peers – in a brief statement last night.
It is understood the 55-year-old, who took the position in 2007, made the decision mainly for personal reasons and felt the time was right to step down following an eventful period in a role which has always attracted criticism no matter the identity of the incumbent.
Rangers boss Walter Smith described the news as "regrettable" due to his namesake's strong footballing background.
Former Scotland boss Craig Brown was "astonished" by Smith's departure after feeling he had settled in well to the post, while Smith's Scottish Premier League counterpart, Neil Doncaster, was "flabbergasted".
Walter Smith had high hopes when the appointment was made but admitted the expected results were not always forthcoming given the competing interests in the game.
The former Scotland manager said: "From my own point of view, it's a regrettable one because he's a football person and he was placed in a position where we would have hoped he could have influenced a lot of things.
"Unfortunately, that doesn't seem to be the case. I think Gordon himself would look upon it and say he was up for the challenge and we were all pleased that he had the opportunity to do so."
Another former Scotland manger, Brown, had also been encouraged by the appointment.
The current Motherwell boss said: "I'm astonished, actually. I thought he was settling in well. It's a very difficult job. I was 16 years working at the SFA, I worked under three different chief executives.
"They all had their qualities but I thought Gordon was an inspired appointment and I still think that, given time, he would have got things going.
"The wheels turn very slowly at the Scottish Football Association because of the committee structure and it must be frustrating for a guy who's full of initiative."
Doncaster added: "I am absolutely flabbergasted. I didn't see that coming at all.
"I would like to wish Gordon well for the future. Since I arrived last summer I have really tried to build relationships between the SFA, the SFL and ourselves. That will continue going forward."
Smith had come to the SFA role with a well-established profile in the game as a successful player with the likes of Rangers and Brighton and latterly his role as media pundit and players' agent.
His resignation came amid calls from Livingston chairman Gordon McDougall for an investigation into Smith's conduct over a disciplinary case against striker Robbie Winters, and days before former Scottish First Minister Henry McLeish is expected to publish his wide-ranging review of the Scottish game.
HIGHS AND LOWS OF SMITH'S REIGN
HIGH (1 June, 2007): Appointed SFA chief executive, replacing David Taylor.
LOW (10 October, 2007): Smith comes under fire over an interview for a book, given before his appointment, in which he claimed UEFA had an "agenda" against former club Rangers over sectarianism.
LOW (27 November, 2007): Alex McLeish resigns as Scotland manager to take charge of Birmingham City.
LOW (14 December, 2007): SFA fails to negotiate favourable fixtures for Scotland's World Cup qualifying campaign.
HIGH/LOW (24 January 24, 2008): George Burley appointed Scotland manager. Smith uses Burley's unveiling to attack critics of the appointment process.
LOW (9 April, 2009): Performs a double U-turn in a matter of hours on the international futures of Barry Ferguson and Allan McGregor following the pair's lifetime bans for their part in the 'Boozegate' affair. Initially he admits they may play for Scotland again before issuing a statement saying the original decision stands.
LOW (14 September, 2009): UEFA upholds Arsenal striker Eduardo's appeal against a two-match ban for diving in his side's Champions League qualifier against Celtic. Smith had urged UEFA to punish the player.
LOW (16 November, 2009): Burley is sacked as Scotland manager barely two months after being given the full backing of the SFA despite his failure to qualify for the World Cup.
HIGH (21 December, 2009): Craig Levein appointed Scotland manager.
LOW (6 March, 2010): Despite persistent campaigns from Smith and others, FIFA decides not to pursue goalline technology.
HIGH/LOW (7 April, 2010): Smith announces SFA plan to revamp controversial disciplinary procedures which allow referees to sit in judgment on their own decisions. Some accuse him of a U-turn on the matter.
LOW (16 April, 2010): Livingston chairman Gordon McDougall demands an investigation into the conduct of Smith over disciplinary proceedings against striker Robbie Winters for alleged diving.
LOW (19 April, 2010): Smith resigns as SFA chief executive.