Rice by-products are extensively abundant agricultural wastes from the rice industry. This study was designed to optimize experimental conditions for maximum recovery of free and bound phenolic compounds from rice by-products. Optimized conditions were determined using response surface methodology based on total phenolic content (TPC), ABTS radical scavenging activity and ferric reducing power (FRAP). A Box-Behnken design was used to investigate the effects of ethanol concentration, extraction time and temperature, and NaOH concentration, hydrolysis time and temperature for free and bound fractions, respectively. The optimal conditions for the free phenolics were 41–56%, 40 °C, 10 min, whereas for bound phenolics were 2.5–3.6 M, 80 °C, 120 min. Under these conditions free TPC, ABTS and FRAP values in the bran were approximately 2-times higher than in the husk. However, bound TPC and FRAP values in the husk were 1.9- and 1.2-times higher than those in the bran, respectively, while bran fraction observed the highest ABTS value. Ferulic acid was most evident in the bran, whereas p-coumaric acid was mostly found in the husk. Findings from this study demonstrates that rice by-products could be exploited as valuable sources of bioactive components that could be used as ingredients of functional food and nutraceuticals.