The challenges of food security and rapid progress in transgenic biotechnology have significantly stimulated the development of genetically modified (GM) rice in China.  Consequently, many GM rice varieties have been produced and some already entered production trials, which is the last step to commercialization.  As GM rice will enter commercial production in the near future, it is urgently needed to develop methodologies for monitoring environmental effects of GM rice in China.  Monitoring such effects from the commercialization of GM rice is challenging because of the complexity of such issue.  This paper discusses the identification of potential environmental effects caused by insect- and herbicide-tolerant GM rice, particularly under the Chinese circumstances of rice farming at the small household scale.  Environmental effects can be the impacts on non-target organisms and biodiversity, transgene flow and its related effects, development of resistance to insect-resistant transgenes and other indirect effects and influences on rice ecosystems by extensive cultivation of GM rice.