Police found the 31-year-old five-time gold medallist wandering around near a parked car on the street.
His manager, James Erskine, told the media Tuesday that Thorpe wasn't drunk, but had taken a combination of anti-depressants and painkillers for a shoulder injury.
"There was no alcohol involved; he hadn't been drinking or anything like that, and the hospital then suggested -- well, more than suggested, I think -- said that he should go into rehab for depression," Erskine told ABC News.
The incident comes days after Thorpe and his team rejected rumors that the former swimmer and television personality had entered rehab for alcohol abuse and depression.
“There is no doubt about it, the false reports did upset him. I’m not saying it sent him in a downward spiral but it did upset him," Erskine said.
Thorpe has written about his struggle with depression in his 2012 autobiography, This is Me.
"There are some mornings when, if I didn't have the routine of training, I would struggle to get out of bed," he wrote. "But, when you get to training, all of a sudden things seem a little better. Of course racing can bring about increased pressure. But when I'm racing I usually manage my depression and anxiety really well. The pulse of anxiety is appropriate then. It's just more troubling on ordinary days."
"It's like a weight is pressing down on you," he said. "There are days when you just can't get out of bed. You cannot face the world. You tell yourself simple things like: 'Just get to the kitchen and get a glass of water.' But not being able to do something so basic is frightening."
Thorpe last competed in the 2004 Summer Olympics in Athens. He attempted a comeback in 2012, but failed to qualify for the London Olympics.
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