Insertions and precise eliminations of transposable elements generated numerous transposon insertion polymorphisms (TIPs) in rice (Oryza sativa). We observed that TIPs represent more than 50% of large insertions and deletions (>100 bp) in the rice genome. Using a comparative genomic approach, we identified 2,041 TIPs between the genomes of two cultivars, japonica Nipponbare and indica 93-11. We also identified 691 TIPs between Nipponbare and indica Guangluai 4 in the 23-Mb collinear regions of chromosome 4. Among them, retrotransposon-based insertion polymorphisms were used to reveal the evolutionary relationships of these three cultivars. Our conservative estimates suggest that the TIPs generated approximately 14% of the genomic DNA sequence differences between subspecies indica and japonica. It was also found that more than 10% of TIPs were located in expressed gene regions, representing an important source of genetic variation. Transcript evidence implies that these TIPs induced a series of genetic differences between two subspecies, including interrupting host genes, creating different expression forms, drastically changing intron length, and affecting expression levels of adjacent genes. These analyses provide genome-wide insights into evolutionary history and genetic variation of rice.