The peroxygenase pathway plays pivotal roles in plant responses to oxidative stress and other environmental stressors. Analysis of a network of co-expressed stress-regulated rice genes demonstrated that expression of OsPXG9 is negatively correlated with expression of genes involved in jasmonic acid biosynthesis. DNA sequence analysis and structure/function studies reveal that OsPXG9 is a caleosin-like peroxygenase with amphipathic α-helices that localizes to lipid droplets in rice cells. Enzymatic studies demonstrate that 12-epoxidation is slightly more favorable with 9(S)-hydroperoxyoctadecatrienoic acid than with 9(S)-hydroperoxyoctadecadienoic acid as substrate. The products of 12-epoxidation are labile, and the epoxide ring is hydrolytically cleaved into corresponding trihydroxy compounds. On the other hand, OsPXG9 catalyzed 15-epoxidation of 13(S)-hydroperoxyoctadecatrienoic acid generates a relatively stable epoxide product. Therefore, the regiospecific 12- or 15-epoxidation catalyzed by OsPXG9 strongly depends on activation of the 9- or 13- peroxygenase reaction pathways, with their respective preferred substrates. The relative abundance of products in the 9-PXG and 13-PXG pathways suggest that the 12-epoxidation involves intramolecular oxygen transfer while the 15-epoxidation can proceed via intramolecular or intermolecular oxygen transfer. Expression of OsPXG9 is up-regulated by abiotic stimuli such as drought and salt stress, but it is down-regulated by biotic stimuli such as flagellin 22 and salicylic acid. The results suggest that the primary function of OsPXG9 is to modulate the level of lipid peroxides to facilitate effective defense responses to abiotic and biotic stressors.