We have established a system to genetically engineer indica rice plants. In order to obtain transgenic plants, genes were introduced into protoplasts isolated from suspension cells of the indica rice var 'IR54' with the aid of polyethylene glycol (PEG). The neo gene was on pKAN and the gusA gene was on pPUR. The promoter for both genes was CaMV35S. Transformed calli were readily recovered from medium supplemented with G-418. In contrast, kanamycin interfered with plant regeneration from protoplast-callus. Transgenic plants were regenerated from calli resistant to G-418 in several separate experiments and grown to maturity in a growth chamber. Southern blot analysis of DNA isolated from leaves of T0 plants verified the presence of the transferred neo and gusA genes in the plant genome. A study of gene expression showed that the CaMV35SgusA gene was active in all of the organs examined. Mendelian inheritance of the introduced gusA gene was observed in progeny obtained by backcrossing the T0 plants to untransformed plants.