Background: Understanding the role of the tumor microenvironment in the response to chemotherapy and radiation in patients with locally advanced rectal cancer (LARC, stage II-III) can lead to the identification of novel immunologic biomarkers to preselect patients who can avoid surgery and benefit from watch-and-wait strategies. Methods: We performed DNA and RNA sequencing of pre-treatment biopsies from 89 LARC patients who received neoadjuvant therapy, including 5 microsatellite unstable (MSI) and 84 microsatellite stable (MSS) patients. We computed single-sample gene set enrichment analysis (ssGSEA) scores for immune infiltrates and signaling pathways implicated in tumor progression. Immunofluorescence and hematoxylin-eosin staining of tumor slides was performed to confirm significant correlations with RNA-Seq estimates of immune markers. Other genomic variables were also included in the analysis, such as tumor mutational burden (TMB), fraction of genome altered by copy number changes, whole genome duplication events and somatic mutations in rectal cancer driver genes and pathways. Results were largely replicated using an independent cohort of 42 LARC samples with publicly available data from The Cancer Genome Atlas (TCGA). Results: Since MSI tumors are known to have a distinct immunologic profile, we separated them into their own group and performed unsupervised hierarchical clustering on the MSS tumors. We identified a set of immune hot MSS tumors (n = 7) with extensive immune infiltration. These tumors had low TMB and were predominantly classified as CMS4 (5/7). None of the 12 patients in the combined MSI and immune hot MSS groups recurred during the length of our study and they had response rates > 50% (vs. < 25% in the rest of MSS patients). MSI and immune hot MSS tumors had lower frequency of TP53 and APC mutations, and they exhibited increased levels of T cell infiltration. In particular, we observed overexpression of markers for Th1 cells, which produce inflammatory cytokines (e.g., IFN-gamma) and are associated with antitumor immunity. Genes encoding protein targets of immune checkpoint blockade, such as PDCD1 (PD-1), CD274 (PD-L1), CTLA4, HAVCR2 (TIM3) and LAG3, were also overexpressed in the immune hot MSS and - to a lesser extent – the MSI tumors, suggesting that these patients might benefit from the use of immune checkpoint inhibitors. Conclusions: Our results uncover a unique LARC tumor immune profile evident in the pre-treatment setting that could be used to better prognosticate rectal cancer patients and develop novel therapeutic strategies.