BACKGROUND: Gene conversion causes a non-reciprocal transfer of genetic information between similar sequences. Gene conversion can both homogenize genes and recruit point mutations thereby shaping the evolution of multigene families. In the rice genome, the large number of duplicated genes increases opportunities for gene conversion. RESULTS: To characterize gene conversion in rice, we have defined 626 multigene families in which 377 gene conversions were detected using the GENECONV program. Over 60% of the conversions we detected were between chromosomes. We found that the inter-chromosomal conversions distributed between chromosome 1 and 5, 2 and 6, and 3 and 5 are more frequent than genome average (Z-test, P < 0.05). The frequencies of gene conversion on the same chromosome decreased with the physical distance between gene conversion partners. Ka/Ks analysis indicates that gene conversion is not tightly linked to natural selection in the rice genome. To assess the contribution of segmental duplication on gene conversion statistics, we determined locations of conversion partners with respect to inter-chromosomal segment duplication. The number of conversions associated with segmentation is less than ten percent. Pseudogenes in the rice genome with low similarity to Arabidopsis genes showed greater likelihood for gene conversion than those with high similarity to Arabidopsis genes. Functional annotations suggest that at least 14 multigene families related to disease or bacteria resistance were involved in conversion events. CONCLUSION: The evolution of gene families in the rice genome may have been accelerated by conversion with pseudogenes. Our analysis suggests a possible role for gene conversion in the evolution of pathogen-response genes.