His father was William Harrison Rice (1813–1862), and mother was Mary Sophia Hyde; both were Protestant missionary teachers at Oahu College.

At an early age Rice began to amass knowledge of Hawaiian culture, myths and legends—along with his fortune.

[1] He attended a boarding school at Kōloa, run by Reverend Daniel Dole.

In Honolulu, on October 17, 1872, he married Mary Waterhouse (1847–1933), and had eight children: In 1872, 26-year-old Rice formed Kipu Plantation and Lihue Ranch, purchasing the Kipu parcel from Princess Ruth Keʻelikōlani for $3,000 to breed cattle and fine horses.

Rice then served his childhood friend Sanford B. Dole, son of his school-master, who was named president of the new Republic of Hawaii, in the Senate from 1895 to 1898.