Torcaso had attempted to juggle coaching United with the Philippines women's national team job, after replacing now-Perth Glory A-League Men boss Alen Stajcic in the latter role.
But after the Philippines fell short of reaching the next round of Olympic qualifying, inaugural coach Torcaso has resigned six weeks into the ALW season.
"I cannot wait to continue watching this team evolve – this team has the capabilities to go all the way," he said in a statement.
"My connection with the women's team will remain, just in a different way. I am looking forward to this and helping in whatever way I can."
Torcaso, who led United to a second-placed finish and a grand final in their first season, will remain at the club in a women's pathway advisory role.
"Mark's commitment to building an exemplary women's program at Western United has been a constant throughout the journey," football boss Mal Impiombato said in a statement.
"We wish him continued success with the Philippines and look forward to the continued contribution he will have at our Club through his advisory role.
Smith and Western Sydney parted ways just 10 days before this season and she will take the reins at United (2-1-3) six games into it.
"This is a great opportunity. Building on the foundations and aiming for the next level is an exciting challenge," Smith said in a statement.
"I acknowledge the challenge that the season brings and will endeavour to create a winning culture and an enjoyable environment for all involved."
Smith led the Wanderers to a seventh-placed finish (five wins, four draws, nine losses) in her first and only season at the helm.
"We are thrilled to welcome Kat to our football club," Impiombato said.
"Kat is an extremely talented coach with a wealth of knowledge and experience and we are buoyant about the impact she will have at Western United."
Assistant coach Helen Winterburn has also departed to take up a full-time role at Central Coast Sports College.
Winterburn is also an assistant coach with the Young Matildas.
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