Villosiclava virens (anamorph: Ustilaginoidea virens) is the pathogen of rice false smut (RFS), which is a destructive rice fungal disease. The albino strain LN02 is a natural white-phenotype mutant of V. virens due to its incapability to produce toxic ustilaginoidins. In this study, three strains including the normal strain P1, albino strain LN02, and complemented strain uvpks1C-1 of the LN02 strain were employed to investigate the activation of the ustilaginoidin biosynthesis gene uvpks1 in the albino strain LN02 to influence sporulation, conidia germination, pigment production, stress responses, and the inhibition of rice seed germination. The activation of the ustilaginoidin biosynthesis gene uvpks1 increased fungal tolerances to NaCl-induced osmotic stress, Congo-red-induced cell wall stress, SDS-induced cell membrane stress, and H2O2-induced oxidative stress. The activation of uvpks1 also increased sporulation, conidia germination, pigment production, and the inhibition of rice seed germination. In addition, the activation of uvpks1 was able to increase the mycelial growth of the V. virens albino strain LN02 at 23 °C and a pH from 5.5 to 7.5. The findings help in understanding the effects of the activation of uvpks1 in albino strain LN02 on development, pigment production, stress responses, and the inhibition of rice seed germination by controlling ustilaginoidin biosynthesis.