The 33-1 shot, ridden by David Mullins and trained by Mouse Morris, triumphed at Aintree in April to become the first novice to win the race since 1958.
The nine-year-old, owned by the Gigginstown House Stud, has twice recovered from a cracked pelvis.
"We didn't want to send him back to Aintree with a big weight, that wouldn't be fair," said Gigginstown's racing manager Eddie O'Leary.
"He provided us with our first Grand National and we'll never forget him."
BBC horse racing correspondent Cornelius Lysaght:
"As the first Grand National winner for owner Michael O'Leary's burgeoning Gigginstown House Stud as well as the first novice chaser to win the race in nearly 60 years, Rule The World has his place in history.
"Though he ran highly respectably at Punchestown after Aintree, O'Leary had already hinted that, having defied serious injury to reach one of the great pinnacles, he had perhaps done his bit.
"What a season for Gigginstown, with success at Aintree, in the Irish National and Cheltenham Gold Cup, but at a price. Rule the World has been retired and there are doubts whether Gold Cup winner Don Cossack will race again."
This year's Grand National winner Rule The World has been retired.