Smith, who picked up his maiden best actor Oscar trophy for playing Richard Williams in "King Richard", during the ceremony strode to the stage minutes earlier and landed a punch on Rock after the comedian cracked a joke about his wife Jada Pinkett-Smith.
After the ceremony concluded, the official Twitter handle of AMPAS posted a brief statement, saying, "The Academy does not condone violence of any form. Tonight we are delighted to celebrate our 94th Academy Awards winners, who deserve this moment of recognition from their peers and movie lovers around the world."
The exchange started when Rock came on stage to announce the winners for best documentary feature award.
Before revealing the winner, Rock decided to land a joke on Pinkett-Smith, saying that she could star in the sequel to "G.I. Jane", to which she was seen rolling her eyes.
The joke was in reference to Pinkett-Smith's shaved head because of autoimmune disorder alopecia but it didn't go down well with Smith, who went up to the stage and punched Rock, leaving everybody in attendance shocked over the events.
After receiving the jab from the actor, Rock said, "Wow. Will Smith just smacked the s**t out of me."
Once he reached back to his seat, Smith shouted at Rock, saying, "Keep my wife's name out of your f**king mouth!".
After Rock announced the winners of the best documentary feature award, Diddy was the next presenter during the ceremony.
The rapper, who appeared to introduce the 50th anniversary celebration to The Godfather , addressed the situation by saying, "Will and Chris, we're going to solve that like a family. Right now we're moving on with love. Everybody make some noise."
Meanwhile, the Los Angeles Police Department issued a statement, revealing that Rock had declined to file a police report.
"LAPD investigative entities are aware of an incident between two individuals during the Academy Awards program. The incident involved one individual slapping another.
"The individual involved has declined to file a police report. If the involved party desires a police report at a later date, LAPD will be available to complete an investigative report," the LAPD statement read.
Smith referenced the incident in his emotional acceptance speech, summing it up as "love will make you do crazy things".
"Thank you Denzel (Washington), who said to me a few minutes ago... he said, 'at your highest moment, be careful, that's when the devil comes for you'," he said.
The 53-year-old actor also apologised to the Academy for the incident in his speech.
"I want to apologise to the academy. I want to apologise to all my fellow nominees... Art imitates life. I look like the crazy father just like they said about Richard Williams. But love will make you do crazy things," the actor said through tears.