Cultivation of paddy rice for human consumption is a dominant agricultural activity throughout Asia. High levels of mercury (Hg) in rice grain pose a potential threat to human health, although the extent of risk is dependent on the chemical speciation of Hg inside the grain. We have investigated the speciation and localization of Hg in three fractions of rice grain (hull, bran, and white rice) collected from a Hg-contaminated region in China. On a mass basis, the majority of inorganic mercury (IHg) in a rice grain is found in hull and bran. However, the majority of the more toxic species methyl mercury (MeHg) is found in edible white rice. Our data show that during grain processing, most of the IHg (similar to 78%) is eliminated, but the majority of the MeHg remains in the food product (similar to 80%). Synchrotron radiation microscopic X-ray fluorescence (SR-mu XRF) mapping shows strong localization of Hg at the surface of brown rice grains, corresponding to the pericarp and aleurone layer. We infer that this Hg is predominantly IHg absorbed from the atmosphere. Based on X-ray absorption near-edge spectroscopy (XANES) data we propose that IHg in bran is primarily bound to cysteine, and is associated with phytochelatins. Consequently, IHg is largely immobile and restricted to the outer layers of rice grain. MeHg in bran is primarily bound to cysteine and is associated with proteins. However, this MeHg-cysteine association behaves like a mobile nutrient and is actively transported to the endosperm during seed ripening. Concentration of MeHg-cysteine in white rice has implications for public health. There is growing evidence for Hg contamination of rice throughout Asia due to point and diffuse sources of Hg pollution. The magnitude of the associated risk must be quantified through better understanding of the localization and speciation of mercury in rice. Our work makes an effort to contribute to this understanding.