Although several japonica and some indica varieties of rice have already been transformed, there is significant scope for improvement in the technology for transformation of economically important indica varieties. Successful transformation of rice employing Agrobacterium and recent advances in direct gene transfer by biolistics, evidenced by transfer of multiple genes, have removed some of the serious impediments in the area of gene engineering. The transfer of genes for nutritionally important biosynthetic pathway has provided many opportunities for performing metabolic engineering. Other useful genes for resistance against pests, diseases and abiotic stresses have also been transferred to rice. But the limited knowledge about important target genes requires rapid progress in the field of functional genomics. Transgenic rice system can be applied to isolate new genes, promoters, and enhancers and their functions could be unravelled. The combination of novel regulatory systems for targeted expression and useful new genes should pave the way for improvement of rice and other cereals.