Most Bt transgenic rice events have an underlying grain cost depending on the insect pressure in the field. This study was conducted (1) to determine if the cry1Ac/bar genetically modified (GM) rice (designated Agb0101) based on a Korean japonica rice cultivar has any underlying grain cost and (2) to develop cry1Ac/bar GM rice lines with yield performance similar to those of Korean elite cultivars via crossbreeding. A three-year field experiment showed that Agb0101 had a high underlying grain cost equivalent to 18% grain yield loss, and this cost was mainly due to the grain number per panicle. Moreover, it was found that the cry1Ac/bar transgene was inherited as a single dominant gene. BC₁F₄―F₅ crossbred progeny derived from an anther culture of Agb0101―showed phenotypic resemblance to non-transgenic Korean elite cultivars, resulting in a decrease in the grain yield cost of Agb0101 from 27% to 10%. These results suggest that Bt-GM rice-oriented cross-fertilization with a non-GM elite cultivar followed by two- or threefold selection is a feasible method to minimize or remove the underlying grain cost of the Bt transgenic insect-resistant rice line.