The PsbS protein plays an important role in dissipating excess light energy as heat in photosystem II (PSII). However, the physiological importance of PsbS under naturally fluctuating light has not been quantitatively estimated. Here we investigated energy allocation in PSII in PsbS-suppressed rice transformants (ΔpsbS) under both naturally fluctuating and constant light conditions. Under constant light, PsbS was essential for inducing the rapid formation of light-inducible thermal dissipation (ΦNPQ), which consequently suppressed the rapid formation of basal intrinsic decay (Φf,D), while the quantum yield of electron transport (ΦII) did not change. In the steady state phase, the difference between the wild type (WT) and ΔpsbS was minimized. Under regularly fluctuating light, the reduced PsbS resulted in higher ΦII upon the transition from high light to low light and in lower ΦII upon the transition from low light to high light, indicating that ΦII was, to some extent, controlled by PsbS. Under naturally fluctuating light in a greenhouse, rapid changes in ΦII were compensated by ΦNPQ in the WT, but by Φf,D in ΔpsbS. As a consequence, a significantly lower ΣNPQ integrated ΦNPQ over a whole day) and higher Σf,D were found in ΔpsbS. Furthermore, thermal dissipation associated with photoinhibtion was enhanced in ΔpsbS. These results suggest that PsbS plays an important role in photoprotective process at the induction phase of photosynthesis as well as under field conditions. The physiological relevance of PsbS as a photoprotection mechanism and the identities of ΦNPQ and Φf,D are discussed.