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Rice is the main staple food after wheat for more than half of the world’s population in Asia. Apart from carbohydrate source, rice is gaining significant interest in terms of functional foods owing to the presence of aromatic compounds that impart health benefits by lowering glycemic index and rich availability of dietary fibers. The demand for aromatic rice especially basmati rice is expanding in local and global markets as aroma is considered as the best quality and desirable trait among consumers. There are more than 500 volatile aromatic compounds (VACs) vouched for excellent aroma and flavor in cooked aromatic rice due to the presence of aromatic hydrocarbons, aldehydes, phenols, alcohols, ketones, and esters. The predominant VAC contributing to aroma is 2 acetyl-1-pyrroline, which is commonly found in aerial parts of the crop and deposits during seed maturation. So far, literature has been focused on reporting about aromatic compounds in rice but its extraction, characterization, and quantification using analytical techniques are limited. Hence, in the present review, extraction, characterization, and application of aromatic compound have been elucidated. These VACs can give a new way to food processing and beverage industry as bioflavor and bioaroma compounds that enhance value addition of beverages, food, and fermented products such as gluten-free rice breads. Furthermore, owing to their nutritional values these VACs can be used in biofortification that ultimately addresses the food nutrition security.