Australian basketball champion Lauren Jackson has retired from the sport, ruling herself out of a bid to make it to the Rio Olympic Games and calling time on a glittering career that saw her win almost every prize around the world.

Jackson said she feels "real empty" when she made the announcement to walk away from the "love of her life" at the AIS on Thursday morning, flanked by her Australian Opals teammates and a huge media throng.

Injuries cruelled Jackson's hopes of finishing her career on her terms at a fifth Olympics later this year and her chronic knee problems will deny her the chance to chase an elusive gold medal.

Jackson started her career at the AIS in 1997 when she burst on to the scene and made her Opals debut as a 16-year-old.

She will walk away from the game as one of Australia's greatest basketballers and one of the best female athletes to have played the sport.

Jackson said she broke down in tears when doctors told her last week she wouldn't make it to the Rio Olympics.

"The doctors said there's no way you'll play in Rio on that knee," Jackson said.

"It was a shock to hear that and I don't think anyone expected it, we thought there might be another month or so to keep going.

"In the back of the mind I knew it wasn't going to get better but when the doctor said that I started crying and I'm going to miss [basketball], it's the love of my life.

"It breaks my heart I'm not going to Rio, but I know the Opals will win."

She said her identity is wrapped up in basketball.

"This hurts right now," she said "I'm not going out the way I want to, my career has been cut short."

"To say goodbye to my love, what was my identity this hurts a lot.

"A few tears have been shed and I feel real empty right now, but i"m excited for the next chapter."

At her peak Jackson was regarded as the best in the world and commanded contracts worth more than $1 million as she conquered competitions in Australia, the United States, Asia and Europe.

But Canberra has always held a special place in her heart after moving to the capital from Albury as a teenager.

Jackson led the AIS to their only WNBL title in 1998-99 before linking with the Canberra Capitals to guide them to their first championship in 1999-2000.

From then she became a Canberra icon and set the standard for female athletes in Australia.

She signed a groundbreaking $1 million third party deal with the Capitals in 2012 - the biggest contract in WNBL history - to play three seasons with the club.

However, injuries limited her game time as she battled to get her body right.

Jackson had numerous knee operations and played through pain to get on the court from the Capitals, occasionally needing fluid drained off her knee before, during and after games.

The last straw for her body came when she got an infection in her knee in November, and she considered an immediate retirement.

Jackson damaged her anterior cruciate ligament while training with Canberra, but refused to give up on her Rio dreams until she was told that she wouldn't be able to play again.

The 34-year-old has detailed her desire to have quality of life when she retires and that she didn't want her injuries to prevent her from being able to play basketball with her future children.

The Opals are in camp at the AIS as they ramp up preparations for the Rio Games.

Jackson insisted the Opals, who have won a medal at every Olympics since 1996, are still capable of winning their first gold without her.

A young Opals team claimed world championship bronze without Jackson and Elizabeth Cambage, whom Jackson believes could emulate her achievements.

"I truly believe under Choc's [coach Brendan Joyce's] leadership they will achieve amazing things in Rio and while it breaks my heart I can't be there, I will be there supporting them in spirit," she said.

"The one thing I never got to do was win Olympic gold but I believe these girls can do it. I just wish I could have been there, but I can't.

"Penny [Taylor] is going to lead the way and Liz [Cambage] could be the best girl there ever was, and she might be.

"I fully believe this Opals team is more than capable of winning gold. They've got the leadership, they've got the coach and they've got the players."

Jackson rated leading Australia to a breakthrough world championship gold in 2006 as the highlight of her career.

She was also Australia's Olympic flag bearer at the 2012 London Games.

That [world championship gold] was an unbelievable time," Jackson said.

"Penny got MVP of the tournament and I was top scorer and we won the world championship.

"It's one thing I'll hold in my heart so dear."

With Chris Dutton