Japanese guidelines include high-grade (poorly differentiated) tumors as a risk factor for lymph node metastasis (LNM) in T1 colorectal cancer (CRC). However, whether the grading is based on the least or most predominant component when the lesion consists of two or more levels of differentiation varies among institutions. This study aimed to investigate which method is optimal for assessing the risk of LNM in T1 CRC. We retrospectively evaluated 971 consecutive patients with T1 CRC who underwent initial or additional surgical resection from 2001 to 2021 at our institution. Tumor grading was divided into low-grade (well- to moderately differentiated) and high-grade based on the least or predominant differentiation analyses. We investigated the correlations between LNM and these two grading analyses. LNM was present in 9.8% of patients. High-grade tumors, as determined by least differentiation analysis, accounted for 17.0%, compared to 0.8% identified by predominant differentiation analysis. A significant association with LNM was noted for the least differentiation method (p < 0.05), while no such association was found for predominant differentiation (p = 0.18). In multivariate logistic regression, grading based on least differentiation was an independent predictor of LNM (p = 0.04, odds ratio 1.68, 95% confidence interval 1.00-2.83). Sensitivity and specificity for detecting LNM were 27.4% and 84.1% for least differentiation, and 2.1% and 99.3% for predominant differentiation, respectively. Tumor grading via least differentiation analysis proved to be a more reliable measure for assessing LNM risk in T1 CRC compared to grading by predominant differentiation.