Plant metallochaperones are a class of specific metal-binding proteins that mediate metal distribution and homeostasis, but their biological functions and mechanisms underlying metal acquisition, translocation and detoxification are largely unknown. This study functionally characterized a novel heavy metal-associated isoprenylated plant protein (HIPP) subfamily member OsHIPP42 involved in rice tolerance to the toxic metal cadmium (Cd). The OsHIPP42 proteins were targeted to the nucleus and plasma membrane. It was transcriptionally expressed in nodes, basal stems and peduncles throughout the life span. OsHIPP42 was sufficiently induced in roots under excess Cd, zinc (Zn), manganese (Mn) and copper (Cu) stresses. The tolerant capability during Cd stress was demonstrated in the yeast cells expressing OsHIPP42. Transgenic rice overexpressing (OX) OsHIPP42 displayed improved plant elongation, biomass, and chlorophyll accumulation. In contrast, the OsHIPP42 knockout mutation due to the T-DNA insertion resulted in compromised growth response. Intriguingly, both Oshipp42-1 and OsHIPP42-1 mutant lines had a reduced Cd concentration in rice straw, particularly in the grains, with 38.6–44.6% lower than those of wild-type. Notably, the OsHIPP42 overexpression and mutant lines were not found to be involved in rice tolerance to excess Zn, Mn and Cu, suggesting that OsHIPP42 may work selectively on the Cd allocation and detoxification. This work highlights the significance of the genetically improved genotype materials that will potentially be used to minimize Cd accumulation in rice crop and reduce environmental risks to human health through food chains.