Multimodality treatment of rectal cancer, with the combination of radiation therapy, chemotherapy, and surgery has become the preferred approach to locally advanced rectal cancer. The use of neoadjuvant chemoradiation therapy (CRT) has resulted in reduced toxicity rates, significant tumor downsizing and downstaging, better chance of sphincter preservation, and improved functional results. A proportion of patients treated with neoadjuvant CRT may ultimately develop complete clinical response. Management of these patients with complete clinical response remains controversial and approaches including radical resection, transanal local excision, and observation alone without immediate surgery have been proposed. The use of strict selection criteria of patients after neoadjuvant CRT has resulted in excellent long-term results with no oncological compromise after observation alone in patients with complete clinical response. Recurrences are detectable by clinical assessment and frequently amenable to salvage procedures.