Pseudogenes are significant components of eukaryotic genomes, and some have acquired novel regulatory roles. To date, no study has characterized rice pseudogenes systematically or addressed their impact on the structure and function of the rice genome. In this genome-wide study, we have identified 11,956 non-transposon-related rice pseudogenes, most of which are from gene duplications. About 12% of the rice protein-coding genes, half of which are in singleton families, have a pseudogene paralog. Interestingly, we found that 145 of these pseudogenes potentially gave rise to antisense small RNAs after examining approximately 1.5 million small RNAs from developing rice grains. The majority (>50%) of these antisense RNAs are 24-nucleotides long, a feature often seen in plant repeat-associated small interfering RNAs (siRNAs) produced by RNA-dependent RNA polymerase (RDR2) and Dicer-like protein 3 (DCL3), suggesting that some pseudogene-derived siRNAs may be implicated in repressing pseudogene transcription (i.e., cis-acting). Multiple lines of evidence, however, indicate that small RNAs from rice pseudogenes might also function as natural antisense siRNAs either by interacting with the complementary sense RNAs from functional parental genes (38 cases) or by forming double-strand RNAs with transcripts of adjacent paralogous pseudogenes (2 cases) (i.e., trans-acting). Further examinations of five additional small RNA libraries revealed that pseudogene-derived antisense siRNAs could be produced in specific rice developmental stages or physiological growth conditions, suggesting their potentially important roles in normal rice development. In summary, our results show that pseudogenes derived from protein-coding genes are prevalent in the rice genome, and a subset of them are strong candidates for producing small RNAs with novel regulatory roles. Our findings suggest that pseudogenes of exapted functions may be a phenomenon ubiquitous in eukaryotic organisms.