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."

Police in Arkansas wish to unlock an iPhone and iPod belonging to two teenagers accused of killing a couple, according to the Associated Press (AP).
Less than a day after its San Bernardino announcement, the FBI agreed to help in the homicide case.
Syed Farook and his wife were shot dead after killing 14 people in December.
A judge agreed to postpone the Arkansas case on 28 March to allow prosecutors to ask the FBI for help.
Hunter Drexler, 18, and Justin Staton, 15, are accused of killing Robert and Patricia Cogdell at their home in Conway, Arkansas last July.
Staton had been raised as a grandson by the Cogdells.
"We always appreciate [the FBI's] cooperation and willingness to help their local law enforcement partners," Faulkner County prosecuting attorney Cody Hilland told the AP.
An attorney for Mr Drexler told the AP he was "not concerned" about any data on the phone.
Previously, the FBI had asked Apple to write new software that would allow it to gain access to Farook's iPhone.
However, the company refused, arguing it would be wrong to compromise the security of one of its devices since that might lead to vulnerabilities in many other iPhones.

The 34-year-old rejoined the New Lawn side in July 2016 and was ever-present as they won promotion to League Two last season.
He made 144 appearances in his first spell with the club before spending the 2015-16 season with Gateshead.
Mark Cooper has signed defenders Lee Collins and Callum Evans and midfielder Reece Brown as they prepare for their first season in the Football League.
This year's Grand National winner Rule The World has been retired.
[NEXT_CONCEPT]
The FBI has offered to unlock another iPhone for police after revealing it could access the handset used by San Bernardino killer Syed Farook.
[NEXT_CONCEPT]
Forest Green Rovers goalkeeper Sam Russell has signed a new one-year deal.