The hybrid Bacillus thuringiensis (Bt) δ-endotoxin gene Cry1Ab/Ac was used to develop a transgenic Bt rice (Oryza sativa L.) targeting lepidopteran insects of rice. Here, we show the production of a marker-free and tissue-specific expressing transgenic Bt rice line L24 using Agrobacterium-mediated transformation and a chemically regulated, Cre/loxP-mediated DNA recombination system. L24 carries a single copy of marker-free T-DNA that contains the Cry1Ab/Ac gene driven by a maize phosphoenolpyruvate carboxylase (PEPC) gene promoter. The marker-free T-DNA was integrated into the 3' untranslated region of rice gene Os01g0154500 on the short arm of chromosome 1. Compared to the constitutive and non-specific expression of the P (Actin1):Cry1Ab/Ac:T (Nos) gene in the control Bt rice line T51-1, the P ( Pepc ):Cry1Ab/Ac:T (Nos ) gene was detected only in the leaf and stem tissues of L24. More importantly, compared to high levels of CRY1Ab/Ac proteins accumulated in T51-1 seeds, the CRY1Ab/Ac proteins were not detectable in L24 seeds by Western blot analysis. As demonstrated by insect bioassay, L24 provided similar level of resistance to rice leaffolder (Cnaphalocrocis medinalis) as T51-1. The marker-free transgenic line L24 can be used directly in rice breeding for insect resistance to lepidopteran insects where absence of Bt toxin protein in the seed is highly desirable.