Smith, the former leader of the province's Official Opposition, led the defection of nine Wildrose MLAs to the ruling PC party in December — a move that angered many in her southern Alberta riding.
The Wildrose, now down to five MLAs, elected former MP Brian Jean to replace Smith earlier in the night.
"I need to thank Danielle, thank you for running a fair campaign," Fischer said after the results were announced.
"I look forward to meeting with the PC caucus tomorrow … and working with Premier Prentice in the next general election."
Fischer said she is still considering whether she will step down from her current position with Okotoks and will consult with her fellow councillors.
When asked if she would ask for Smith's help in the expected spring election, Fischer laughed and told reporters to "just give me five minutes."
Suzanne Oel, the president of the party's constituency association in Highwood, said 972 ballots were cast, but would not reveal how much of the vote either candidate received.
Smith gave a short speech congratulating Fischer following the announcement.
"This is, of course, a mixed-emotions day for me. I did want to get a mandate to be the PC candidate for Highwood, but residents felt otherwise," she said. "I look forward to supporting Carrie in her efforts to win this riding for the Progressive Conservatives."
She said her decision to leave the Wildrose for the PC party, which may have contributed to her loss, was "absolutely not" a mistake.
Smith said she would take time to discuss with her husband before deciding what she would do next.
Another floor-crosser defeated
The same evening that Smith lost the nomination, her old party picked the person to fill the job she vacated. Brian Jean, a former Fort McMurray MP, won the leadership of the Wildrose Party less than an hour earlier.
Jean, while reluctant to speak at length on Smith's loss, did say the party felt "betrayed" by its former leader.
"The membership spoke and they didn’t want Danielle Smith as their representative," he said.
Heather Forsyth, who served as interim leader of the party after Smith's departure, was concise when speaking on her former colleague's fortunes.
"Thanks, Alberta," she said when asked about Smith's defeat.
Smith wasn't the only former Wildrose member to fail to find footing in the Tory party Saturday. Gary Bikman lost his bid for the nomination in Cardston-Taber-Warner to Brian Brewin shortly after the Highwood vote.