Phelps won the lung-bursting event at the past two Olympics but was considering dropping it from his programme for London, which will be his final appearance at the Games.
But the 26-year-old left open the possibility that he could eclipse his record from Beijing four years ago when he did not withdraw from Monday's race by the scratch deadline.
He needs to finish in the top two at the trials to swim the event in London. If he wins it, he will become only the third swimmer, and the first male, to win the same event at three Olympics.
"I had always said that, and I still say and I believe it more now than I really ever have, that there comes an end to everything, and for me and my career, I never want to look back and say "What if I did this one way and that one way?," he said.
"I want to do everything I ever wanted to do before I retire."
Already the most successful Olympian of all time with 14 gold medals, Phelps has the possibility of winning another 10 gold medals in London.
He also entered the 100m freestyle, 200m freestyle, 200m medley, 200m backstroke, 100m butterfly and 200m butterfly at the trials and could swim the three relays at London.
His decision to remain in the 400m medley adds another round to his eagerly-anticipated heavyweight clash with his great rival Ryan Lochte, who has entered a staggering 11 individual events in the trials.
The pair will go head-to-head in four races, the 400m medley, 200m medley, the 200m freestyle and 100 freestyle, although Lochte was unsure if he would swim all the events he entered.
"I'm going to step on the blocks and race as many times as my body can handle," he said.
"I don't know if that will be one or it could be eleven. We'll just have to wait and see."
More than 1800 swimmers qualified for the trials but fewer than 50 will make it to London for the July 27-August 12 Games. On the pool deck, the organisers installed a red phone box as a visual reminder of what is at stake.
"There is tremendous competition in a lot of different events, veterans versus very young people, people that have missed before," said Teri McKeever, the head coach of the women's team.
"I'm a firm believer that competition brings out the best in the people that you would want representing the U.S. at the Olympics."
While Phelps and Lochte have hogged the spotlight in the leadup to the trials, where only the top two in each individual event qualify for the Olympics, the women's programme also offers up a mouthwatering rivalry.
Natalie Coughlin has been the standard bearer for the American women's team for the past eight years, winning 11 Olympic medals including three gold, but Missy Franklin is looming as the next big thing.
Like Phelps, the 17-year-old from Colorado is a versatile swimmer with a heavy workload. She has entered five individual events for the trials, giving her the possibility of eight events in London with the addition of the relays.
"She is amazing. She has the same characteristics that you see from Ryan, Michael, Natalie," said Gregg Troy, the head coach of the men's team.
"She is a great racer, when she is in a close race, she knows how to get her hand on the wall, and those are real hard things to teach."