Hamels will make $20 million next season on the team option. The Cubs had until 4 p.m. ET Friday to make a decision on retaining him.
The 34-year-old Hamels went 9-12 with a 3.78 ERA in 32 starts in 2018. Hamels and his agent, John Boggs, have said they would be open to exploring a longer-term deal.
Smyly did not pitch for the Cubs last season as he continued his recovery from Tommy John surgery in June 2017. Smyly, 29, has a career ERA of 3.74, with a 31-27 record in five seasons with the Detroit Tigers and Tampa Bay Rays.
Trading Smyly will save the Cubs $7 million in 2019 as they prepare for free agency.