This study investigated the effects of rice preparation using different degrees of milling (DOM) from 0% to 13% on the nutritional composition, functional properties, major volatile compounds and safety of brown rice tea (BRT). We found that 2% DOM reduced 52.33% of acrylamide and 31.88% of fluorescent AGEs. When DOM was increased from 0% to 13%, the total phenolic content (TPC) of brown rice tea decreased by 48.12%, and the total flavonoid content (TFC) and condensed tannin content (CTC) also decreased significantly, with the smallest decrease at 2% DOM. In addition, the inhibitory activities of α-amylase, α-glucosidase and pancreatic lipase as well as the antioxidant activity also decreased gradually. Analysis by electronic nose and gas chromatography-mass spectrometry (GC-MS) showed that alkanes, furans, aldehydes, pyrazines and alcohols were the major volatiles in BRT, with 2% DOM having the greatest retention of aroma compounds. An orthogonal partial least squares discriminant analysis (OPLS-DA) and VIP score (VIP > 1 and p < 0.05) analysis were used to screen 25 flavor substances that contributed to the differences in BRT aroma of different DOMs. These results suggest that 2% milled BRT can improve safety and palatability while maximizing the retention of flavor compounds and nutrients. The findings of this study contribute to an enhanced understanding of the dynamics of changes and preservation of aroma compounds and nutrients present during the processing of BRT.