There is an inverse relationship between the level of cytosine methylation in genomic DNA and the activity of plant transposable elements. Increased transpositional activity is seen during early plant development when genomic methylation patterns are first erased and then reset. Prolonging the period of hypomethylation might therefore result in an increased transposition frequency, which would be useful for rapid genome saturation in transposon-tagged plant lines. We tested this hypothesis using transgenic rice plants containing Activator (Ac) from maize. R1 seeds from an Ac-tagged transgenic rice line were either directly germinated and grown to maturity, or induced to dedifferentiate in vitro, resulting in cell lines that were subsequently regenerated into multiple mature plants. Both populations were then analyzed for the presence, active reinsertion and amplification of Ac. Plants from each population showed excision-reinsertion events to both linked and unlinked sites. However, the frequency of transposition in plants regenerated from cell lines was more than nine-fold greater than that observed in plants germinated directly from seeds. Other aspects of transposon behavior were also markedly affected. For example, we observed a significantly larger proportion of transposition events to unlinked sites in cell line-derived plants. The tendency for Ac to insert into transcribed DNA was not affected by dedifferentiation. The differences in Ac activity coincided with a pronounced reduction in the level of genomic cytosine methylation in dedifferentiated cell cultures. We used the differential transposon behavior induced by dedifferentiation in the cell-line derived population for direct applications in functional genomics and validated the approach by recovering Ac insertions in a number of genes. Our results demonstrate that obtaining multiple Ac insertions is useful for functional annotation of the rice genome