Red yeast rice is a substance that's extracted from rice that's been fermented with a type of yeast called Monascus purpureus. It's been used in China and other Asian countries for centuries as a traditional medicine.It's also used as a food coloring, additive, and preservative.onfusingly, the answer is both. One of the most important ingredients in red yeast rice is monacolin K. It's also known as lovastatin, the active ingredient in the prescription drug Mevacor. So on one hand, red yeast rice is a traditional remedy that helps lower cholesterol.