The team also fired offensive coordinator Ron Turner and five other coaches on that side of the ball Tuesday after going 7-9 with Jay Cutler at quarterback and missing the playoffs for the third consecutive season following a Super Bowl run.
"This has been a frustrating season to say the least," Bears president and CEO Ted Phillips said. "We've had inconsistent play on both sides of the ball. Personally, it's been the most frustrating year since I've been here.
"The last three years, it's been clear nobody did a good enough job in the organization," Phillips added. "Nobody did."
The Bears had problems on offense and defense and fell far short of expectations after the blockbuster trade to acquire Cutler from the Denver Broncos. But instead of bringing in a big-name coach such as Bill Cowher, the Bears stuck with Smith, who has two years and $11 million left on his contract.
Bears general manager Jerry Angelo, who also was under scrutiny, said he asked team ownership if they wanted to go with a high-profile coach and would have understood if they did. Phillips, meanwhile, said Angelo recommended keeping Smith and that money was "a non-factor."
"If we didn't believe as an organization that Lovie and Jerry could turn this around and get us back to our winning ways, then there would have been other changes made," Phillips said.
But Phillips also made it clear: The Bears better win next season.
"We all know what we need to do," he said. "We're not happy. We're not happy with the season we had. We're not happy with the last three years, and the expectation is to turn it around in 2010. At the end of 2010, we'll go through another evaluation process and see where we're at."
At the moment, the Bears aren't in a good spot. They have finished 7-9 in two of the past three seasons and are trying to overhaul their staff at a time when the coach appears to be on shaky ground and potential labor issues loom.
"People will want to come here," Smith said.
NFL Network's Jason La Canfora reports that Jeremy Bates, a USC assistant who coached Cutler in Denver, is a very strong candidate for the offensive coordinator position. Former Notre Dame coach Charlie Weis and ex-St. Louis Rams coach Mike Martz also are expected to receive consideration.
Martz told The Associated Press that he's interested in becoming the Bears' offensive coordinator and reuniting with Smith, his defensive coordinator in St. Louis. Martz also said he hasn't heard from the Bears.
"It's attractive from a lot of different viewpoints, but for me, particularly because it's Lovie," Martz said.
Turner's second stint as Chicago's offensive coordinator lasted five years, a run that included two playoff appearances but ended with the Bears ranked 23rd in the NFL in yards per game and 29th in rushing. A frosty relationship with Cutler probably didn't help, either.
Also fired by the Bears on Tuesday were coaches Pep Hamilton (quarterbacks), Rob Boras (tight ends), Harry Hiestand (line), and assistants Luke Butkus and Charles London.
"I'm not going to say everything that went wrong with this football team is because of how we ran our offense," Angelo said. "No. That's not right. It's a combination of a lot of things here."
Smith said he will look outside the organization for a defensive coordinator and that line coach Rod Marinelli isn't a candidate for the job. League sources told La Canfora that outgoing Buffalo Bills interim head coach and defensive coordinator Perry Fewell, who worked with Smith with the Rams and the Bears, is the leading candidate.
For all the moves, though, Smith said he's looking for coaches with similar philosophies. And that "no matter who comes in here, we're going to have to run the football."
"Changing schemes and all that, I think you have to stay with what you believe in," Smith said. "Obviously, you want a winning football team. ... We've been in a position where we've won with the things that we believe in, so why can't we do that?"
The Bears dropped eight of their last 10 games following a 3-1 start, and as the losses mounted, so did speculation about Smith's job status. Angelo at one point refused to say that Smith would be back while insisting there was no need for a roster overhaul.
Chicago went from 11 losses to 11 wins in its first two years under Smith, who was the Rams' defensive coordinator, before going 13-3 in 2006 and making a run to the Super Bowl. Since then, the Bears are 23-25 and have finished below .500 twice.
The problems this season were well-documented.
Cutler often scrambled for his life behind a struggling offensive line and threw 26 interceptions, the most by a Bears quarterback since Sid Luckman's franchise-record 31 in 1947 and the most in the NFL since Brett Favre threw 29 for the Green Bay Packers in 2005. Cutler was under pressure, but he also made bad decisions, and running back Matt Forte faltered after a promising rookie season.
There were a few positives, though.
Cutler's 3,666 passing yards were second-most by a Bears quarterback behind Erik Kramer's 3,838 in 1995, and an inexperienced receiving corps showed some promise. Johnny Knox ranked seventh among rookies with 45 catches for 527 yards, and Devin Aromashodu came on strong over the final month and finished with 298 receiving yards.
On the offensive line, there are decisions to make involving center Olin Kreutz and tackle Orlando Pace, both veterans.
While the hammer fell on Turner, the defense wasn't much better even with Smith as the de facto coordinator after stripping the play-calling duties from Bob Babich, who officially still held the title while serving as linebackers coach.
The Bears lost star linebacker Brian Urlacher to a season-ending injury in the opener at Green Bay, a big loss for a team that was hoping to contend in the NFC, and the defense never showed the dominant form that led Chicago to the playoffs in 2005 and 2006. The Bears ranked 17th in yards allowed, 21st in scoring and 27th in third-down conversions allowed.
"The years that we've been here, how many years have we been bad on third downs?" Smith said. "One. Pretty much this past year. ... Our system, most people want to know what we do on third downs. They buy into what we've done."
Team owner Virginia McCaskey and the McCaskey family issued a statement that expressed support for the changes.
"This season was difficult for everyone," the McCaskeys said. "We are thankful to Bears fans for their passion and are committed to bringing them a winner. The entire Chicago Bears organization understands the importance of being a consistent contender."
The Associated Press contributed to this report.