A defensive role against insect attack has been traditionally attributed to plant protease inhibitors. Here, evidence is described of the potential of a plant protease inhibitor, the potato carboxypeptidase inhibitor (PCI), to provide resistance to fungal pathogens when expressed in rice as a heterologous protein. It is shown that rice plants constitutively expressing the pci gene exhibit resistance against the economically important pathogens Magnaporthe oryzae and Fusarium verticillioides. A M. oryzae carboxypeptidase was purified by affinity chromatography and further characterized by mass spectrometry. This fungal carboxypeptidase was found to be a novel carboxypeptidase B which was fully inhibited by PCI. Overall, the results indicate that PCI exerts its antifungal activity through the inhibition of this particular fungal carboxypeptidase B. Although pci confers protection against fungal pathogens in transgenic rice, a significant cost in insect resistance is observed. Thus, the weight gain of larvae of the specialist insect Chilo suppressalis (striped stem borer) and the polyphagous insect Spodoptera littoralis (Egyptian cotton worm) fed on pci rice is significantly larger than that of insects fed on wild-type plants. Homology-based modelling revealed structural similarities between the predicted structure of the M. oryzae carboxypeptidase B and the crystal structure of insect carboxypeptidases, indicating that PCI may function not only as an inhibitor of fungal carboxypeptidases, but also as an inhibitor of insect carboxypeptidases. The potential impact of the pci gene in terms of protection against fungal and insect diseases is discussed.