Background: Perineural invasion (PNI) as a prognostic indicator has not been well studied in patients with rectal adenocarcinoma treated with neoadjuvant chemoradiation (nCRT). In this study, we investigated the incidence and prognostic significance of PNI in patients with stages II-III locally advanced rectal cancer treated with nCRT. Methods: We performed a retrospective study of 110 consecutive patients treated with nCRT for locally advanced rectal adenocarcinoma at a single institution from 2004 to 2011. 88 of these patients had residual tumor in the resected specimen after nCRT. We evaluated the association of PNI with clinical outcomes, including disease-free survival (DFS), distant-metastasis-free survival (DMFS), and overall survival (OS), using log-rank and Cox proportional hazard modeling. Results: Of the 88 patients with residual tumor at surgery, 14 patients (16%) had PNI and 74 patients (84%) did not. Baseline distribution of selected variables in the PNI+ and PNI- groups are shown in Table 1. Median follow-up was 27 months (range 0.9 to 84 months). The median DFS was 13.5 months for PNI+ patients and 39.8 months for PNI- patients (p<0.0001). The median DMFS was 13.5 months for PNI+ patients and median not reached (> 40 months) for PNI- patients (p<0.0001). We did not detect a significant association between the presence of PNI and worse OS, perhaps due to a high rate of censored patients in the OS analysis. In a multivariate model including pT stage, pN stage, tumor location, tumor size, type of surgery, and radial margin status, PNI remained a significant predictor of DFS (HR 16.8, 95% CI, 3.7–75.5, p<0.0002) and DMFS (HR 18.9, 95% CI, 4.4–81.9, p<0.0001). Conclusions: For patients with locally advanced rectal cancer treated with nCRT prior to surgical resection, PNI found at the time of surgery is significantly associated with worse DFS and DMFS.