The Federal Aviation Administration said all personnel were evacuated from the radar facility in suburban Elgin around 11:30 a.m. They were allowed to return about three hours later.
The Chicago Department of Aviation said a limited number of landings and departures had resumed by late afternoon.
Elgin Fire Capt. Anthony Bialek said a bathroom exhaust fan in a ceiling overheated and melted insulation on some wires, and smoke was pushed through the facility's ventilation system and into the control room.
Bialek said it took about an hour to find the source of the smoke at Chicago Terminal Radar Approach Control, or TRACON. There were no injuries.
Controllers at the TRACON facility are responsible for managing the region's air traffic as it leaves and approaches all of the area's airports. Once an aircraft is within about 5 miles of an airport, TRACON workers hand over control to that airport's tower.
Inbound flights already in the area at the start of the shutdown were handled by a backup air traffic facility in the city of Aurora, just west of Chicago. Some flights were diverted to other airports.
Aerial TV footage Tuesday afternoon showed a large backup of aircraft along taxiways at O'Hare International Airport. Inside the terminals, people trying to rebook on later flights formed long lines.
David Winter of Sarasota, Florida, said he and his wife, Denise, would stay overnight in Chicago after their flight was canceled.
"My wife hates to fly ... so she literally asked me if we could rent a car and drive," Winter said, adding that they ruled it out and were rebooked on a Wednesday flight.
Instead, the retired couple stopped off at an airport cocktail lounge.
"So, obviously, we're not in dire straits," he said.
As of about 3:30 p.m., arrivals at O'Hare were about 75 percent of normal - 72 an hour compared with the normal of about 106 per hour, said Doug Church, a spokesman for the National Air Traffic Controllers Association, the union that represents controllers. Departures were operating normally, he said.
O'Hare is the second-busiest airport in the country by numbers of passengers and is a major hub. Around half of passengers there are connecting to other flights.
Any disruption to its operations has an enormous ripple effect on the nation's aviation system.
The Chicago Aviation Department said more than 600 flights were canceled at O'Hare and 75 at Midway International Airport.
A computer glitch at a similar facility last month forced a 45-minute shutdown at Los Angeles International Airport.