Smart Bar Chicago 1985 was released on November 13, 2012 on Goofin' Records. It was announced for released on September 10 on the band's official web site and "Intro"/"Brave Men Run" was made available for stream on YouTube on October 15. The album was made available on CD, double LP and as a digital download from online retailers. Upon its release, it charted in Belgium, peaking at 182 on Wallonia's Ultratop chart.
Upon its release, Smart Bar Chicago 1985 received positive acclaim from critics. Allmusic reviewer Fred Thomas awarded it 4.5 stars out of 5 and wrote, "The band sounds locked into a collective meditation for much of the set, stringing together the long and discordant segments of songs into a mostly uninterrupted hour and change of sound." Thomas later added, "Without besting the album versions, almost every song here offers a more vivid, more extreme counterpoint to its better-known studio side" and summarized the album as "unpolished, tormented, hungry, and constantly threatening to crumble into godless noise." Writing for Drowned in Sound, Noel Gardner said, "On 'Brave Men Run (In My Family)', [Steve] Shelley elevates it with a near-classic rock fluidity to his playing [...] 'I Love Her All The Time' feels like a Moore vehicle, much like on record, but has great gobs of anti-rock no wave atmos; 'Ghost Bitch' is considerably more abrasive here, [Kim] Gordon sounding less like a coffee house poet than an untamed punk vocalist—Penelope Houston, say." Gardner rated the album 7 out of 10 and summarized: "Smart Bar – Chicago 1985 is not going to change perceptions of either Sonic Youth or live albums: it's a decent recording strictly for fans." Describing the album as "a taste of glories to come", Rolling Stone writer Rob Sheffield awarded the album 3.5 out of 5 stars and noted "Expressway to Yr Skull" and "Secret Girl" as highlights, adding, "The peak is the early ballad 'I Love Her All the Time'—noisy, emotionally alive, jittery with excitement for the future." In his review in Smart Bar Chicago 1985 's liner notes, Aaron Mullan referred to the album as "brilliant" and the show itself as "a killer show." He added, "The material is also so visceral and improvisatory that it greatly benefits from the additional perspective offered by a live recording."