Born in Akron, Ohio, Smalley was educated at Michigan University and at Princeton where he obtained his PhD in 1973. After spending the period from 1973 to 1976 at the James Franck Institute, Chicago, Smalley moved to Rice University, Houston, and was appointed professor of chemistry in 1981.

In 1981 Smalley devised a procedure to produce microclusters of a hundred or so atoms. The technique is to vaporize the metal by a laser. The released atoms are cooled by a jet of helium and condense into variously sized clusters. In 1985 a visiting British chemist, Harry Kroto (1939–2016), persuaded Smalley to direct his laser beam at a graphite target. Smalley knew that an Exxon group had already used graphite and produced carbon molecules with an even number of atoms. At first Smalley was reluctant to repeat this work but he was eventually persuaded. They soon had spectroscopic evidence for the presence of an apparently large, stable molecule of sixty carbon atoms – now known as buckminsterfullerene ("buckyballs"). In 1996 he was award the Nobel Prize in Chemistry, along with Robert Curl and Harold Kroto, for this discovery.