With 500 metres to go, Muir tried to keep pace with the leaders before eventually being caught and finishing in seventh place in Rio de Janeiro.
Despite the disappointment, Muir has suggested that she had no regrets over her approach to the race as Faith Chepngetich Kipyegon went on to win gold.
The 23-year-old told BBC Sport: "I went for the win, it's not every day you find yourself in an Olympic final. I was in great shape but the last 150m was not quite in me. I gave everything and I'm proud with how I ran.
"I expected it to be slow start and then for Kipyegon and [Genzebe] Dibaba to come round. I expected to have to react, I followed them round but I couldn't hold on. It's my first Olympics, I gave it everything."
British compatriot Laura Weightman finished the race in 11th position.