Seed setting is an important trait that contributes to seed yield and relies greatly on starch accumulation. In this study, a sulfoquinovosyl transferase-like protein, designated as SQD2.2 involved in seed setting and flavonoid accumulation, was identified and characterized in rice. Rice SQD2.2 is localized to the cytoplasm, and the SQD2.2 transcript was highest in leaves. Rice SQD2.2-overexpressing (OE) plants exhibited a decreased seed setting rate and diminished tiller number simultaneously with an increased glycosidic flavonoid level compared with wild-type (WT) plants. SQD2.2 catalyzes the glycosylation of apigenin to produce apigenin 7-O-glucoside using uridine diphosphate-glucose (UDPG) as a sugar donor, but it failed to compensate for sulfoquinovosyldiacylglycerol (SQDG) synthesis in the Arabidopsis sqd2 mutant. Furthermore, apigenin 7-O-glucoside inhibited starch synthase (SS) activity in a concentration-dependent manner, and SQD2.2-OE plants exhibited reduced SS activity accompanied by a significant reduction in starch levels and an elevation in soluble sugar levels relative to WT plants. Both adenosine diphosphate-glucose (ADPG) and UDPG levels in SQD2.2-OE plants were notably lower than those in WT plants. Taken together, rice SQD2.2 exhibits a novel role in flavonoid synthesis and plays an important role in mediating sugar allocation between primary and secondary metabolism in rice.