To examine the relationship between tumor regression grade (TRG) and outcomes in patients with rectal cancer treated with preoperative therapy. Specimens from 144 patients with cT3,4 rectal cancer who had received preoperative radiation +/- chemotherapy and had a minimum follow-up of 3 years were retrospectively reviewed. TRG, which involves examining the residual neoplastic cells and scoring the degree of both cytological changes, including nuclear pyknosis or necrosis and/or eosinophilia, as well as stromal changes, including fibrosis (either dense or edematous) with or without inflammatory infiltrate and giant-cell granulomatosis around ghost cells and keratin, was quantified in five grades according to the Mandard score (Cancer 1994;73:2680-2686). The greater the response, the lower the TRG score. The median follow-up was 72 months (range, 40-143 months). Of the 144 patients, 19% were TRG1, 12% were TRG2, 21% were TRG3, 46% were TRG4, and 1% were TRG5. To simplify the analysis, TRG was combined into two groups: TRG1-2 and TRG3-5. By univariate analysis, none of the pretreatment factors examined, including age, circumference, length, distance from the anorectal ring, pretreatment T and N stage, and INDpre (defined as the pretreatment reference index size based on digital rectal examination), had an impact on 5-year outcomes, including local control, metastases-free survival, disease-free survival, and overall survival. Postoperative parameters, including pathologic T stage (pT), pathologic N stage (pN), and TRG, did significantly influence 5-year outcomes. These included local failure: pT0-2: 5% vs. pT3-4: 19%, p = 0.007; pN0: 7% vs. pN1-3: 26%, p = 0.002; TRG1-2: 2% vs. TRG3-5: 17%, p = 0.013; metastasis-free survival: pT0-2: 86% vs. pT3-4: 62%, p = 0.005; pN-: 86% vs. pN*: 42%, p < 0.001; TRG1-2: 91% vs. TRG3-5: 66%, p = 0.004; disease-free survival: pT0-2: 83% vs. pT3-4: 54%, p = 0.001; pN0: 80% vs. pN1-3: 39%, p < 0.001; TRG1-2: 91% vs. TRG3-5: 58%, p < 0.001; and overall survival: pT0-2: 85% vs. pT3-4: 65%, p = 0.007; pN0: 86% vs. pN1-3: 45%, p < 0.001; TRG1-2: 89% vs. TRG3-5: 68%, p = 0.004. By multivariate analysis combining all pre- and posttreatment parameters, only pN (p < 0.001) and TRG (p = 0.005) significantly predicted disease-free survival. Furthermore, TRG predicted the incidence of pathologic nodal involvement (p < 0.0001). By univariate analysis, TRG is a predictor for local failure, metastases-free survival, and overall survival. By multivariate analysis, it predicts improved disease-free survival. Given the ability of TRG to predict those patients with N* disease, it may be helpful, in combination with other clinicopathologic factors, in selecting patients for a more conservative procedure, such as local excision rather than radical surgery, after preoperative therapy.