Luminescent fine Si powder was prepared by an Mg reduction process of SiO2 particles extracted from rice husks. The surface of the powder was terminated by the hydrophilic molecules of undecanoic acid via the hydrosilylation process. After the hydrosilylation of the fine Si powder obtained from rice husks, surface termination by undecanoic acid was confirmed to suppress natural surface oxidation. Transmission electron microscopy observations of the rice husk fine Si powder showed that the Si nanoparticles have a crystalline structure. Room temperature photoluminescence in the wavelength range of 500–1000 nm was observed in the samples taken at each step of the process, and the stability of the luminescence properties was improved via undecanoic acid surface termination. The observation of wavelength dependent microsecond-order photoluminescence indicates that the photoluminescence was due to quantum size effects. On the basis of time-transient light transmittance of rice husk Si colloid, the surface termination of undecanoic acid improved the dispersibility of Si particles in distilled water. The production of luminescent rice husk Si colloid is effective for the preparation of luminescent bio labels and will lead to high value-added recycling of rice husks.