Smalley, still seeking his first PGA Tour victory, had one of a bevy of bogey-free five-under 65s on Thursday (Friday AEST) and is one of 12 players a shot behind six first-round leaders.
Lee Hodges, among those who had to sit through a two-hour weather delay during his round, was at 64 along with four other Americans, reigning US Open champion J.J. Spaun, Ryan Gerard, Andrew Putnam, Matt McCarty and South Korea's Tom Kim.
It's the second-most leaders after 18 holes at Colonial behind the eight atop the leaderboard in 2022.
Keegan Bradley, Brian Harman, Jordan Smith, Ricky Castillo and Luke Clanton matched Smalley with five birdies and no bogeys. The other six players at five under included 2019 US Open champion Gary Woodland and eight-time tour winner Billy Horschel.
There were another 13 players at four under, putting 31 players within two shots of the lead at Hogan's Alley. Defending champion Ben Griffin, whose won three times last year, is two under.
"It's one of my favourite courses we play all year because I don't think there's any one person that it caters to," Hodges said.
"You don't have to bomb it. You've got to have your whole game here. I think it's a great test of golf."
Brandt Snedeker (70) is even, but his round included a hole-in-one on the 16th.
Smalley finished three shots behind Aaron Rai at the PGA, tied with Jon Rahm after leading by two through 54 holes and spent the next few days focused more on travel plans for the US Open and British Open than his return to Texas.
The PGA finish matched that career best and Smalley finally picked up a golf club again last Thursday. Four of his five birdie putts were inside five feet, including a 134-yard approach to inside a foot at the par-4 15th.
"Definitely more of the scoreable conditions I've seen around here, but still not an easy golf course," Smalley said.
"To have no bogeys on the scorecard anywhere is nice, especially here."
Kim twice had the lead by himself at seven under, but bogeyed the par-4 fifth and followed a birdie at the sixth with another bogey at No.7, his 16th.
Hodges went in front with five birdies in a six-hole stretch to start his back nine, while Gerard finished with eight birdies and two bogeys.
"It was nice to get a couple putts to go in," said Gerard, whose only tour victory came at last year's Barracuda Championship.
Cameron Davis shot a two-over 72, while fellow Australian Karl Vilips (79) sits at the bottom of the 132-player leaderboard at nine over.
With AAP.
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