After trailing Samantha Hamill at the turn of the first butterfly leg, the 23-year-old world record holder assumed control in the backstroke and powered home to post a world class time of four minutes 33.45 seconds at the South Australia Aquatic and Leisure Centre.
Rice, who also holds the 200m IM Olympic title, finished more than four seconds in front of runner-up Blair Evans and was brimful of confidence after sealing her sixth straight national title.
"(It's) the biggest relief, the biggest weight lifted off my shoulders," she told reporters after pumping both her arms in the air upon seeing her winning time.
"I guess (it's) the toughest preparation I've had to date, I had to really just get my head around the fact that I couldn't do the sessions that I was doing in the leadup to Beijing."
Rice's time was just four seconds shy of her world mark set at the Beijing Games and the second fastest this year behind Britain's Hannah Miley who posted a 4:32.67 at the British championships earlier this month.
It sets an impressive marker ahead of London, as Rice continues her recovery from arthroscopic surgery on her troublesome shoulder in December.
"It's still torn which is why I've had a bit of trouble with it," added Rice, who felt confident of reaching her peak form ahead of London.
"I'm older now I'm a different athlete, I think I'm a lot more confident than I was when I was 18 and obviously it's been really tough mental preparation as well just to get my head around surgeries and inconsistent training."
Evans's runner-up finish was enough to guarantee her the second 400IM medley spot on Australia's Olympic team.
Libby Trickett, one of a clutch of former Australian champions on the comeback road after a period of retirement, snuck into the final of the 100 butterfly to keep her hopes of defending her Olympic title alive.
The 27-year-old Trickett finished sixth fastest of the semi-finalists, more than a second adrift of pace-setter and former 200 butterfly world champion Jessicah Schipper, who posted a time of 58.26 seconds.
Trickett broke a minute for the first time since returning to the pool in the heat and improved on the time in the semi-final but faces an uphill battle to finish in the top two against Schipper and world silver medallist Alicia Coutts on Friday.
"I was just excited to go faster than this morning to be honest," the bubbly triple Olympic champion said.
"It's going to be a fun race tomorrow, the girls are racing really quickly... The bulldog comes out in me (for the final) but at the end of the day it's just such a thrill to be racing at this level."
World bronze medallist Geoff Huegill, who has enjoyed a fairytale comeback after returning to the pool following depression and weight problems, booked a place in the final of the men's 50 butterfly.
Emily Seebohm, a member of Australia's gold medal-winning 4x100 medley team at Beijing, qualified fastest for the 50 backstroke final.
World record holder Brenton Rickard eased into the final of the 100 metres breaststroke, while Thomas Fraser-Holmes set an Australian record in capturing his third straight title in the men's 400IM.
David McKeon won the 400 freestyle title to seal an Olympic berth with runner-up Ryan Napoleon.