Lignin content and composition are two important agronomic traits for the utilization of agricultural residues. Rice (Oryza sativa) gold hull and internode phenotype is a classical morphological marker trait that has long been applied to breeding and genetics study. In this study, we have cloned the GOLD HULL AND INTERNODE2 (GH2) gene in rice using a map-based cloning approach. The result shows that the gh2 mutant is a lignin-deficient mutant, and GH2 encodes a cinnamyl-alcohol dehydrogenase (CAD). Consistent with this finding, extracts from roots, internodes, hulls, and panicles of the gh2 plants exhibited drastically reduced CAD activity and undetectable sinapyl alcohol dehydrogenase activity. When expressed in Escherichia coli, purified recombinant GH2 was found to exhibit strong catalytic ability toward coniferaldehyde and sinapaldehyde, while the mutant protein gh2 completely lost the corresponding CAD and sinapyl alcohol dehydrogenase activities. Further phenotypic analysis of the gh2 mutant plants revealed that the p-hydroxyphenyl, guaiacyl, and sinapyl monomers were reduced in almost the same ratio compared to the wild type. Our results suggest GH2 acts as a primarily multifunctional CAD to synthesize coniferyl and sinapyl alcohol precursors in rice lignin biosynthesis.