Smith has been a lightning rod for criticism from Democrats and others who supported the federal health care law and wanted Walker's administration to embrace it.
"From day one, Dennis Smith was more interested in an extreme ideology than in advocating for the health and well-being of Wisconsinites," said Wisconsin Democratic Party Chairman Mike Tate. "Wisconsin's next DHS secretary has the opportunity to turn the page on this unprecedented assault on BadgerCare. I hope for all Wisconsin families, she takes it."
Rhoades didn't give any indication in a statement released through Walker's office that she intended to change how the department is run.
"Wisconsin has been a leader in reforming our health care system, and with the governor's innovative proposals, we will continue this tradition," she said.
Rhoades has been Smith's deputy since January 2011. Prior to that, she served in the state Assembly from 1999 through 2010.
Smith came to Wisconsin after having served as head of the U.S. Centers for Medicare and Medicaid Services since 2007.