All-rounder Marnus Labuschagne comes in as Smith's replacement, marking the first use of a concussion substitute in international cricket. Under new regulations that came into effect on August 1, Labuschagne is allowed to bat and bowl despite being a substitute.
On day four, Smith was forced to retire hurt on 80 after a 148.7kph Archer bouncer struck him on the neck. He later came back out, adding 12 runs before being trapped lbw by Chris Woakes.
"Steve has been closely monitored by medical staff overnight and this morning reported that after sleeping well, he woke with 'a bit of a headache and a feeling of grogginess,'" read Cricket Australia's statement, released on the morning of day five.
"As part of the Cricket Australia concussion protocol, repeat concussion testing of Steve Smith was also performed this morning and demonstrated some deterioration from his testing which is consistent with the emergence of the symptoms he was reporting.
"Cricket Australia statistics show that 30 percent of concussions in Australian cricket are delayed. It is not uncommon for players to pass their tests and feel well on the day of an injury and then display symptoms 24 - 48 hours later."
Australia must now wait on a decision regarding Smith's potential involvement in the third Test at Headingley, which commences on Thursday 22 August.
"In terms of Steve's availability for the third Test, this will be considered over the coming days but the short turnaround to the next Test is not in his favour. Steve's fitness will be assessed on an ongoing basis. Steve will undergo a precautionary scan on his neck on Sunday.
"Despite the unfortunate nature of what has happened, the positive is that the concussion protocol, including the availability of the concussion substitute, which has been recently brought in has served its purpose. A player is no longer under pressure to take the field when he or she displays symptoms of concussion and a side is not disadvantaged having lost a player to a blow to the head or neck."