The breeding of low phytic acid (LPA) crops is widely considered an effective strategy to improve crop nutrition, but the LPA crops usually have inferior seed germination performance. To clarify the reason for the suboptimal seed performance of LPA rice, this study investigated the impact of reduced seed phytic acid (InsP6) content in rice ins(3)P synthase1 (EC 5.5.1.4, RINO1), one of the key targets for engineering LPA rice, knockouton cellular differentiation in seed embryos and its relation to myo‐inositol metabolism and auxin signalling during embryogenesis. The results indicated that the homozygotes of RINO1 knockout could initiate differentiation at the early stage of embryogenesis but failed to form normal differentiation of plumule and radicle primordia. The loss of RINO1 function disrupted vesicle trafficking and auxin signalling due to the significantly lowered phosphatidylinositides (PIs) concentration in seed embryos, thereby leading to the defects of seed embryos without the recognizable differentiation of shoot apex meristem (SAM) and radicle apex meristem (RAM) for the homozygotes of RINO1 knockout. The abnormal embryo phenotype of RINO1 homozygotes was partially rescued by exogenous spraying of inositol and indole‐3‐acetic acid (IAA) in rice panicle. Thus, RINO1 is crucial for both seed InsP6 biosynthesis and embryonic development. The lower phosphatidylinositol (4,5)‐bisphosphate (PI (4,5) P2) concentration and the disorder auxin distribution induced by insufficient inositol supply in seed embryos were among the regulatory switch steps leading to aberrant embryogenesis and failure of seed germination in RINO1 knockout.