The 22-year old triple Olympic gold medal-winner tweeted: "Suck on that faggots" after Australia's 41-39 win over South Africa in Saturday's rugby union test.
She was heavily criticised by sports stars, including Australian rugby great Ian Roberts, among others following her homophobic comment. Roberts labelled Rice an idiot.
He told the Sydney Morning Herald: "She is an idiot … and anyone who continues to endorse her as an athlete is an idiot as well."
Rice followed her faggots tweet, adding: "Probably the best game I’ve ever seen!! Well done boys".
Jaguar took Roberts at this word and wasted no time in dropping Rice. In a statement Jaguar Australia said that it had terminated its relationship with Rice, who has been an ambassador for the marque since the start of 2010.
"The terms of the agreement and its termination remain confidential. We wish Stephanie success for the future," a Jaguar spokesman said.
Rice later apologised for her Wallabies' related tweet, sending another tweet saying: "Okay so maybe I got a bit too excited before!! But I love seeing Australians do well."
Rice has 8,205 followers on Twitter and does use her account to talk about her sponsorship deals including this tweet from September 3: "clarifying that i bought swimwear not underwear...dont need to buy that when u have a great sponsorship with @Davenportundies :) hahaha".
Earlier today Davenportundies, which has just begun airing a new ad starring Rice, tweeted: "Davenport doesn't in any way condone the comment made by Steph Rice last Saturday".