In the present work, rice pasta by-product (RPBP) was used as a raw material for the production of Monascus vinegar. Alcoholic fermentation using RPBP and red yeast rice koji were carried out, and the fermentative characteristics based on the yeast strains (Saccharomyces cerevisiae TISTR 5169, TISTR 5196, and TISTR 5197) were investigated. The compositional changes and functional properties of Monascus vinegar were examined. S. cerevisiae TISTR 5169 produced a higher yield of alcohol in a shorter time as compared to other strains, in which 10% alcohol was observed after four days of fermentation. Descriptive sensory evaluation showed that Monascus wine fermented by S. cerevisiae TISTR 5169 (W5169) showed the highest result of intensity in cereal, fruit, and alcohol aroma. Therefore, W5169 was selected for subsequent acetous fermentation. During fermentation for 39 days, the titratable acidity (acetic acid) increased, associated with the decrease in alcohol contents and pH values. Acetification increased total phenolic content in accordance with an increase of antioxidant activity. Moreover, Monascus vinegar contained functional ingredients including Monascus pigments; yellow (0.17 OD unit/mL), orange (0.08 OD unit/mL), red (0.06 OD unit/mL), monacolin K (0.0141 ppm), and total phenolic content (71.70 µg GAE/mL). Monascus vinegar exhibited potential for antioxidant activity (58.8%) and xanthine oxidase inhibitory activity (73.7%), and in particular, was without the mycotoxin citrinin.