Rice genome harbors genes and promoters with retrotransposon insertions. There is very little information about their function. The effect of retrotransposon insertions in four rice promoter regions on gene regulation, was investigated using promoter-reporter gene constructs with and without retrotransposons. Differences in expression levels of gus and egfp reporter genes in forward orientation and rfp in reverse orientation were evaluated in rice plants with transient expression employing quantitative RT-PCR analysis, histochemical GUS staining, and eGFP and RFP fluorescent microscopy. The presence of SINE in the promoter 1 (P1) resulted in higher expression levels of the reporter genes, whereas the presence of LINE in P2 or gypsy LTR retrotransposon in P3 reduced expression of the reporter genes. Furthermore, the SINE in P1 acts as an enhancer in contrast with the LINE in P2 and the gypsy LTR retrotransposon in P3 which act as silencers. CTAA and CGG motifs in these retrotransposons are the likely candidates for the downregulation compared to TCTT motif (SINE) which is a candidate for the upregulation of gene expression. The effect of retrotransposons on gene regulation correlated with the earlier investigation of conservation patterns of these four retrotransposon insertions in several rice accessions implying their evolutionary significance.