The smelter's operational boss Pablo Bohler symbolically gave the order for the shutdown after six decades of operation in an area that also hosts plants and factories of more than a dozen other companies.
Codelco's nearby copper refinery will remain operational.
Codelco announced it would close the Ventanas smelter after an incident in June last year when more than 100 people, mostly schoolchildren, suffered sulfur dioxide poisoning in the area around Quintero and Puchuncavi -- two coastal towns that are home to some 50,000 people.
It had been the second such incident in three days.
Quintero and Puchuncavi have been deemed "sacrifice zones" since 1958, when the Chilean government converted what had been a fishing and farming community into an industrial hub.
The area now hosts four coal-fired power stations as well as oil and copper refineries.
Greenpeace described the area around the Ventanas plant as "Chile's Chernobyl" following a serious incident in 2018 when around 600 people were treated for symptoms such as vomiting blood, headaches, dizziness and paralysis of the extremities.
"Today the furnaces of the smelter are extinguished, but not the conviction of building a fairer Chile in which all inhabitants have the right to live their lives" in safety, President Gabriel Boric said Wednesday.
Some of the smelter's 766 workers will be moved to other jobs, while the rest will leave Codelco under a severance deal with the company that supplies eight percent of the world's copper.
Last year, Chile's environmental superintendent ordered six companies operating in the area to "limit their productive activity, without harming the primary supply" and instructed that measures be taken to reduce pollution from Codelco operations.
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