In a statement Smith, who is a list MP based in Nelson, said Parliamentary Service had been conducting "a confidential inquiry into a verbal altercation in my Wellington office last July that has not concluded".
"I was advised on Friday that the inquiry and its details have been leaked to the media for release tomorrow. It is inappropriate for employment disputes to be litigated in public.
"I will put on the record that I regret the incident, I apologised at the time and I apologise again today. I have decided the best course of action for the parties involved, the National Party, my family and myself is to retire now."