Limits for sphincter preservation in rectal cancer have been expanded under the assumption that patients with a permanent colostomy have worse quality of life (QoL). Incontinence and painful defecation are common problems; therefore, this study compares functional outcome and QoL after sphincter-sparing intersphincteric resection (ISR), low anterior resection (LAR), and abdominoperineal resection (APR) for rectal cancer. From a prospective database, three matched groups of patients after surgery for rectal cancer between 1999 and 2009 were extracted. Median follow-up was 59 months. Of 131 patients receiving a questionnaire, 95 % could be analyzed further. Generic and disease-specific validated QoL (European Organization for Research and Treatment in Cancer QLQ-C30, CR38) and Wexner incontinence score were used. Global QoL was comparable between the groups. Physical functioning was significantly better after sphincter preservation surgery than APR (p < 0.05). Symptom scores for diarrhea (DIA) and constipation (CON) were higher after sphincter-preserving surgery (ISR: DIA 45.4, CON 20.2; LAR: DIA 34.1, CON 25.2) compared to APR (DIA 16.6, CON 12.0) (p < 0.05 and <0.01, respectively). Disease-specific QoL assessment showed significantly worse QoL regarding to male sexual function after APR (80.8) than after ISR (53.6) (p < 0.005). Regarding defecation, the ISR group showed significantly higher symptom scores than patients after LAR (p < 0.05). Wexner scores were significantly higher after ISR (12.9) than after LAR (9.5) (p < 0.005).