Overexpression of bacterial-derived starch metabolic enzymes in plant starch storage organs represents a valuable strategy for improving starch quality, bioprocessing and nutritional value. Transgenic rice seeds producing a thermostable and bifunctional starch hydrolase, amylopullulanase (APU) from Thermoanaerobacter ethanolicus 39E, were generated. Starch in these seeds could be hydrolyzed with optimal temperatures between 85 and 95 °C, which resulted in complete conversion of starch into soluble sugars and production of protein-enriched flour within a few hours. By expressing various levels of APU, rice seeds containing reduced amounts of amylose, which is an important factor affecting starch quality, were obtained without a significant impact on grain yield. Elevation in granule-bound pullulanase activity correlates with the reduction of amylose in developing APU-containing rice seeds. APU was found to be localized within amyloplasts and in cell walls, which could be the result of overexpression of APU with a signal peptide. This study establishes novel approaches to alter starch properties, accelerate bioprocessing of starch and production of protein-enriched flour from rice seeds, and could significantly impact the industrial and food uses of cereals.