Rice was asked on CNN to clarify President George W. Bush's statement during his debate late Thursday with Senator John Kerry that "the A.Q. Khan network has been brought to justice."
Khan, the father of his country's nuclear bomb, publicly confessed in February to leaking nuclear secrets to Iran, Libya and North Korea.
But Pakistani President Pervez Musharraf, who insisted the proliferation was carried out by a handful of scientists without government involvement, has given Khan a conditional pardon.
And Pakistan officials have refused agents with the International Atomic Energy Agency (IAEA), the UN's atomic watchdog agency, access to interview Khan to discuss the international black market he used to run.
Khan is "a particular kind of figure in Pakistani lore, a national hero, and Musharraf has dealt with what is a very difficult situation" by "making certain that he's out of business," said Rice.
Khan has lost privileges "to travel and the like," said Rice, and "a number of countries are pursuing prosecutions" of network members, she added, mentioning South Africa and at least one unnamed European country.
"A.Q. Khan, in a sense, has been brought to justice because he is out of the business that he loved most," said Rice. "And if you don't think that his national humiliation is justice for what he did, I think it is. He's nationally humiliated.