Gene duplication is an important mechanism for evolution of new genes. In plants, a special group of transposable elements, called Pack-MULEs or transduplicates, is able to duplicate and amplify genes or gene fragments on a large scale. Despite the abundance of Pack-MULEs, the functionality of these duplicates is not clear. Here, we present a comprehensive analysis of expression and purifying selection on 2809 Pack-MULEs in rice (Oryza sativa), which are derived from 1501 parental genes. At least 22% of the Pack-MULEs are transcribed, and 28 Pack-MULEs have direct evidence of translation. Chimeric Pack-MULEs, which contain gene fragments from multiple genes, are much more frequently expressed than those derived only from a single gene. In addition, Pack-MULEs are frequently associated with small RNAs. The presence of these small RNAs is associated with a reduction in expression of both the Pack-MULEs and their parental genes. Furthermore, an assessment of the selection pressure on the Pack-MULEs using the ratio of nonsynonymous (Ka) and synonymous (Ks) substitution rates indicates that a considerable number of Pack-MULEs likely have been under selective constraint. The Ka/Ks values of Pack-MULE and parental gene pairs are lower among Pack-MULEs that are expressed in sense orientations. Taken together, our analysis suggests that a significant number of Pack-MULEs are expressed and subjected to purifying selection, and some are associated with small RNAs. Therefore, at least a subset of Pack-MULEs are likely functional and have great potential in regulating gene expression as well as providing novel coding capacities.