Local excision is an organ-preserving treatment alternative to transabdominal resection for patients with stage I rectal cancer. However, local excision alone is associated with a high risk of local recurrence and inferior survival compared with transabdominal rectal resection. We investigated the oncological and functional outcomes of neoadjuvant chemoradiotherapy and local excision for patients with stage T2N0 rectal cancer.We did a multi-institutional, single-arm, open-label, non-randomised, phase 2 trial of patients with clinically staged T2N0 distal rectal cancer treated with neoadjuvant chemoradiotherapy at 26 American College of Surgeons Oncology Group institutions. Patients with clinical T2N0 rectal adenocarcinoma staged by endorectal ultrasound or endorectal coil MRI, measuring less than 4 cm in greatest diameter, involving less than 40% of the circumference of the rectum, located within 8 cm of the anal verge, and with an Eastern Cooperative Oncology Group performance status of at least 2 were included in the study. Neoadjuvant chemoradiotherapy consisted of capecitabine (original dose 825 mg/m(2) twice daily on days 1-14 and 22-35), oxaliplatin (50 mg/m(2) on weeks 1, 2, 4, and 5), and radiation (5 days a week at 1·8 Gy per day for 5 weeks to a dose of 45 Gy, followed by a boost of 9 Gy, for a total dose of 54 Gy) followed by local excision. Because of adverse events during chemoradiotherapy, the dose of capecitabine was reduced to 725 mg/m(2) twice-daily, 5 days per week, for 5 weeks, and the boost of radiation was reduced to 5·4 Gy, for a total dose of 50·4 Gy. The primary endpoint was 3-year disease-free survival for all eligible patients (intention-to-treat population) and for patients who completed chemotherapy and radiation, and had ypT0, ypT1, or ypT2 tumours, and negative resection margins (per-protocol group). This study is registered with ClinicalTrials.gov, number NCT00114231.Between May 25, 2006, and Oct 22, 2009, 79 eligible patients were recruited to the trial and started neoadjuvant chemoradiotherapy. Two patients had no surgery and one had a total mesorectal excision. Four additional patients completed protocol treatment, but one had a positive margin and three had ypT3 tumours. Thus, the per-protocol population consisted of 72 patients. Median follow-up was 56 months (IQR 46-63) for all patients. The estimated 3-year disease-free survival for the intention-to-treat group was 88·2% (95% CI 81·3-95·8), and for the per-protocol group was 86·9% (79·3-95·3). Of 79 eligible patients, 23 (29%) had grade 3 gastrointestinal adverse events, 12 (15%) had grade 3-4 pain, and 12 (15%) had grade 3-4 haematological adverse events during chemoradiation. Of the 77 patients who had surgery, six (8%) had grade 3 pain, three (4%) had grade 3-4 haemorrhage, and three (4%) had gastrointestinal adverse events.Although the observed 3-year disease free survival was not as high as anticipated, our data suggest that neoadjuvant chemoradiotherapy followed by local excision might be considered as an organ-preserving alternative in carefully selected patients with clinically staged T2N0 tumours who refuse, or are not candidates for, transabdominal resection.National Cancer Institute and Sanofi-Aventis.