The wheels for a coaching change were put into motion earlier in the day on Wednesday, when Smith announced that he had been relieved of his duties after two years.
Smith went 40-26 at Memphis, including 21-13 this season.
Smith was asked whether he thought he coached his last game with the Tigers after a 70-60 loss to Cincinnati in the American Athletic Conference tournament semifinals Saturday.
He came to Memphis in April 2016 as one of only two coaches to lead five different schools to the NCAA Tournament. Tubby Smith, looking to run a clean program and not risk NCAA violations, fired Keelon Lawson and nearly immediately, the local media declared Smith a problem for Memphis basketball.
Upon hearing that news, reporter Amy Fadool Kane, who now works for NBC Sports Philadelphia, shared a story about Smith's kindness while he was Kentucky's head coach. Reports from last week indicated that the university would look to replace head coach Tubby Smith with former Tigers great Penny Hardaway.
"After considerable deliberations and in the best financial interest of the University of Memphis, an agreement of separation with Head Men's Basketball Coach Tubby Smith has been reached", the school said in a statement. "Details are to be finalized, and no further comment will be offered".
The Tigers will have to pay him his full remaining salary, reportedly close to $10 million.
His son, Saul, had been one of three assistant coaches on staff at Memphis.
Memphis did not play in the postseason with Smith as head coach.
Penny is now the coach at Memphis East High School.