The discharge may affect Nowak's veterans' benefits and her pay grade was knocked down one rank.
Nowak was sentenced in 2009 to a year of probation in the attack after pleading guilty to burglary charges, as aprt of a plea agreement.
Since her dismissal from the astronaut corps, Nowak has been working at the Chief of Naval Air Training station in Corpus Christi, Texas.
Juan Garcia, the assistant secretary of the Navy for manpower and reserve affairs, said in a statement Thursday that Nowak would be demoted to O-5 and receive an other-than-honorable discharge. Her retirement takes effect Sept. 1.
After the attack: Police mugshot of Lisa Nowack in 2007
'Capt. Nowak’s conduct fell well short of that expected of senior officers in our Navy and demonstrated a complete disregard for the well-being of a fellow service member, ' Garcia said in the statement.
Nowak had flown on the Space Shuttle Discovery in July 2006, working as a robotics arm operator during space walks.
Seven months later, she got into her husband's blue BMW, drove nearly 1, 000 miles from Houston to Orlando - allegedly using diapers along the way so she wouldn't have to stop - stalked Shipman throughout the airport and then attacked her in a darkened parking lot.
Nowak denies that she actually wore the diapers.
The attack concerned the affections of fellow astronaut and U.S. Navy Cmdr. William Oefelein, who had broken up with Nowak after he met Shipman.
Nowak was fired from NASA shortly after the attack, while the U.S. Navy ended Oefelein's ties to the space agency.
Oefelein and Shipman subsequently retired from the military and married ocala.com reports.
Nowak and her husband, Richard, divorced in 2008.
Some of the evidence found on or near Nowak was the pepper spray canister found in the parking lot, a BB pistol, 4-inch hunting knife, a rubber mallet, rubber tubing, large garbage bags - all found in a duffle bag with Nowak - maps to Shipman's home in Cape Canaveral, a receipt for a hotel room in DeFuniak Springs under the name Linda Turner dated the night before the attack, the disguise Nowak wore, and a letter to Oefelein's mother, thanking her for her support.
Shipman, who told a judge that she thought Nowak was trying to kill her, said she is relieved the Navy chose to punish her, noting that the secretary of the navy could have chosen to do nothing.
'Four and a half years after the crime, I am surprised and relieved that the Navy has taken action, ' Shipman said.