Aroma in rice (Oryza sativa L.) results from the loss of function of the betaine aldehyde dehydrogenase (Badh2) gene on chromosome 8. An 8-bp deletion in exon 7 of Badh2 was reported to be the main allele functionally associated with fragrance. The discovery of new functional alleles will provide additional genetic resources to improve fragrant rice. In this study, we sequenced the Badh2 gene in 30 rice accessions and filtered the Badh2 polymorphisms from whole genome re-sequence data of 295 rice accessions. Seven alleles were detected from the sequence data. Six of the seven were known alleles and one was a novel allele (badh2-E12). The novel allele was a 3-bp deletion in exon 12. Five functional markers, targeting six of the seven alleles, were identified. Fourteen accessions were selected to test the utility of these markers. The five molecular markers reliably distinguishing this fragrant rice from other fragrant or non-fragrant rice accessions. Analysis of two F2 rice population validated the genetic markers FME12-3 and FME14I as functional markers. These two markers co-segregated with the fragrance phenotype. These markers will be used in a Badh2 diversity study and to breed improved fragrant rice accessions via marker-assisted selection.