Mismatch repair (MMR) is a conservative pathway for maintaining the genome integrity of different organisms. Although suppression of MMR has resulted in various mutation phenotypes in Arabidopsis, the use of this strategy for mutation breeding in major crops has not been reported. Here, we overexpressed a truncated version of the OsPMS1 protein in rice; this approach is expected to suppress the rice MMR system through a dominant negative mechanism. We observed a wide spectrum of mutation phenotypes in the progeny of the transgenic plants during seed germination and the plant growth stages. Genomic variations were detected with inter-simple sequence repeat (ISSR), and sequencing of the differential ISSR bands revealed that the mutation occurred as a point mutation or as microsatellite instability at high frequencies. Plant lines with agronomically important traits, such as salt and drought tolerance, various tiller number, and early flowering, were obtained. Furthermore, we obtained mutants with important traits that are free of the transgene. Together, these results demonstrate that MMR suppression can be used as an efficient strategy for mutation breeding in rice.