The company had offered the sex dolls for a daily fee of 298 yuan (£34; $46), according to Chinese media.
The models on offer were marketed as Chinese, Korean and Russian women, with one also modelled on the movie character Wonder Woman, complete with a sword and shield.
In its Weibo statement, the firm said its original intention had been to make expensive silicone dolls more affordable but conceded that the service triggered a heated public debate.
The company also said it would pay out compensation to users worth double the amount they had paid as a deposit for reserving a doll.
The statement added that Touch would in future pay more attention to its “social duty”, and would actively promote a “healthier and more harmonious sex lifestyle”.
Aside from its short-lived rental offering, the firm sells an array of sex toys, including sex dolls.