With the completion of the rice genome sequence in 2002, the study on functional genomics in rice has become a major task. Establishment of rice mutant library is an essential approach for rice functional genomics study. At present, utilizing maize transposable element Ac/Ds (Activator/Dissociation) is a promising method to construct insertional mutagenesis library of rice. Ac/Ds tagging system has received extensive application in rice during the past several years, but it is still confronted with practical problems. In this paper, constructing rice insertional mutagenesis library using Ac/Ds-tagging system and transpositional behaviors of an Ac/Ds-tagging system, difficulties and advantages are reviewed. The research advances and challenge in rice functional genomics study using Ac/Ds tagging system are also discussed and summarized in the paper.