Thorpe was affected by a combination of antidepressants and the painkillers he was taking for a shoulder injury, according to his manager James Erskine.
Police spoke to Thorpe after residents near his parents' home in Panania in Sydney's south west reported a man allegedly breaking into a van. He was taken to Sydney's Bankstown Hospital for assessment and was later transferred to a rehab facility.
Mr Erskine said: "He is in rehab for depression."
He said Thorpe thought he was sitting in his friend's car.
"The owner of the car basically called the police and the police came," he said. "They realised it was Ian Thorpe. They realised he was disoriented."
Mr Erskine said Thorpe, 31, had been taking antidepressants and medication for his shoulder but had not been drinking alcohol.
"He hadn't had a drink," he said. "He had zero alcohol in him."
Police said no official complaint has been made and no further police action is anticipated.
Thorpe, who lives in Switzerland, has been staying with his parents over Christmas.
Mr Erskine's admission that Thorpe is in rehab comes only days after his management company denied reports that he checked into a rehab facility while fighting depression and alcohol abuse.
In his autobiography, published last year, Thorpe said "not even my family is aware that I've spent a lot of my life battling what I can only describe as crippling depression".