The chapter of Phi Kappa Psi said in a statement that it would pursue all available legal action. The announcement came a day after a team from the Columbia University Graduate School of Journalism concluded the magazine failed to follow basic journalistic safeguards in publishing the story, which accused the fraternity of hosting a gang rape.
The story sent shockwaves through the sleepy campus about 70 miles from the capital Richmond. Students held demonstrations on campus as well as in front of the fraternity house, which was vandalized after the article was published.
"Clearly our fraternity and its members have been defamed, but more importantly we fear this entire episode may prompt some victims to remain in the shadows, fearful to confront their attackers," Stephen Scipione, the president of the fraternity chapter in Charlottesville, Virginia, said in a statement.
A spokesman for the fraternity said he did not know what would be in the planned lawsuit, or when the fraternity's lawyers would file it. The fraternity said on Monday that images of its house continue to be used by news organizations as a symbol of campus sexual assault.
Rolling Stone did not immediately respond to requests from Reuters for comment.
The magazine is owned by Jann Wenner, who founded it in 1967 primarily to cover music and culture. The privately held company, Wenner Media LLC, also publishes the magazines US Weekly and Men's Journal.
Lawyers with expertise in libel and defamation law have been divided on whether Phi Kappa Psi or its members at the university were in a strong position to prevail in a lawsuit.
The article, written by contributing editor Sabrina Rubin Erdely and published in November, detailed an alleged 2012 gang rape that a first-year student identified as "Jackie" said she had endured at the Phi Kappa Psi fraternity house.
In December, after questions about the story's veracity, Rolling Stone apologized for "discrepancies" in the account and admitted that it never sought comment from seven men accused of the alleged rape.
Rolling Stone is represented by Davis Wright Tremaine, a law firm with a large practice representing media organizations. Elizabeth McNamara, a partner at the firm, referred questions to the magazine.
The magazine said in a statement on Sunday that it would commit itself to a series of recommendations made in the Columbia University review. Wenner, though, told the New York Times on Sunday that the editors of the article, Will Dana and Sean Woods, would not lose their jobs and that Erdely would continue to write for the magazine.
Erdely also apologized in a statement published by the New York Times on Sunday, saying "the Columbia account of the mistakes and misjudgments in my reporting was a brutal and humbling experience."
During a news conference on Monday, co-authors of the Columbia University review said it was not up to them to recommend if people should be fired over what they called an avoidable journalistic failure.
"We pointed out systemic and institutional problems and we are leaving it up to Rolling Stone to decide how to deal with these problems," said co-author Sheila Coronel, academic dean at the journalism school, in response to a question.