Rice had a stunning Olympic debut at Beijing's Water Cube in 2008, winning the 200 and 400 metres individual medley titles as well as gold in the 4x200m freestyle relay, all in world record times.
She struggled with a shoulder injury heading into the 2012 London Olympics, where her failure to win a medal contributed to a disappointing Games for Australia.
She has not raced competitively since and on Wednesday announced on her website that she would not be returning to the pool.
"I knew that I really had to take the time for myself to get to the point where I knew 100 percent what I wanted to do," Rice said in a video posted on the website.
"And I never wanted to make a comeback, so the decision that I wanted to make was definitely final and coming to that point today and not continuing my swimming career is, it's sad.
"Like I definitely feel I'm losing a part of myself but I'm really excited for what's to come."
Rice hit the headlines as a 19-year-old when she set world records at the 2008 national trials in the lead up to Beijing, and her relationship with fellow swimmer Eamon Sullivan ensured she was a fixture in gossip magazines.
Her triple Olympic triumph in China cemented her status as one of Australia's leading sportswomen and saw her carry the country's flag at the closing ceremony.
"Going to Beijing and competing and coming home with three golds and three world records was a complete shock and the best moment that I could have ever experienced," she added.
Rice signed a string of sponsorship deals after her Beijing success, only to lose one with a luxury car manufacturer after she posted a homophobic tweet in the wake of an Australia rugby victory over South Africa in 2010.
She made a tearful apology for the tweet but that was not the only stumble on the road to London, with persistent shoulder problems forcing her to swim through constant pain at her second Games.
Rice made the final of both medley events but failed to medal and her disappointment was compounded when China's Ye Shiwen smashed her 400m medley world record to win gold.
"London was really tough," she said. "There were so many things that went wrong for me in that preparation and it was like I was trying so hard to make everything so perfect and everything went wrong."
Fellow athletes and sporting bodies issued a stream of tributes on social media on Wednesday for Rice, who also won two silver and five bronze medals at three world championships.
"When Steph had a big meet to prepare for, like the Olympic Games, she left no stone unturned," her long-term coach Michael Bohl said in a Swimming Australia news release.
"She really understood the need to prepare at a high level, to perform at a high level, and you could always depend on Steph to deliver at the major meets.
"It's disappointing that she had to overcome a number of injuries late in her career, because she really loved to compete and compete at her best."