An overhand right from the Liverpudlian midway through the second round caught Castillo (now 21-4-1, 16KOs) flush on the temple, leading referee Bob Williams to immediately halt the contest after the Dominican had hit the canvas.
Smith (28-1, 20KOs) jumped on the rope but cut short his celebrations in concern for his stricken foe, whose legs appeared to be trembling as paramedics swiftly entered the ring at Tottenham Hotspur Stadium.
Castillo, 33, was treated for a few minutes where he lay before being taken away on a stretcher to applause from those in attendance after the light-heavyweight contest.
It is understood Castillo was conscious before being led away in an ambulance and promoter Eddie Hearn wrote on Twitter: “A horrible brutal knockout. Castillo is responsive and on his way to hospital.”
Smith, 31, was making his first foray at 175lbs after suffering the first defeat of his professional career last December, when Saul ‘Canelo’ Alvarez ripped away his WBA super-middleweight title.
He has since parted company with long-time trainer Joe Gallagher to link up with Buddy McGirt and Smith showed he has carried his power to the new division against an opponent who had never previously been stopped.
An uneventful first three minutes was followed by a dramatic end, with Smith’s short right hand finding its target to brutally end proceedings.