We have developed a population of transgenic indica rice lines containing the autonomous Activator transposon (Ac) from maize. A transposon excision assay using as the reporter the green fluorescent protein (GFP) gene driven by the ubiquitin promoter was used to monitor Ac excision in various tissues. Our results, based on Ac excision and re-insertion events in 289 independent rice transformants, provide an insight into transposon biology in this heterologous model cereal system. Twenty percent of the transformed calli displayed uniform GFP activity, indicating very early Ac excision, while later excision in another 40% of calli was revealed by mosaic GFP activity. Both phenotypes were confirmed by molecular analysis. Progeny analysis revealed active transposition, with some lines displaying transposition to unlinked positions. Amplification of the Ac copy number was observed in approximately 30% of the lines, thus tagging multiple sites. We developed a "transposon insertion display" procedure, involving the use of CpG methylation-sensitive enzymes and a macroarray-based approach with cDNA as a complex hybridization probe, to selectively detect transposon insertions in transcribed sequences. Sequencing of tagged sites identified by hybridization to leaf cDNA revealed that all the hybridizing tags were homologous to genes or ESTs present in databases. Extrapolation from these data suggests that 12% of all amplified tags display homology to genes or ESTs - five times more than would be expected on the basis of random transpositional insertion. This Tagged Transcriptome Display (TTD) technique, using a population of Ac insertion-tagged lines, therefore represents a convenient approach for the identification of tagged genes involved in specific processes, as revealed by their expression patterns.