Perineural invasion (PN) in colorectal cancer (CRC) is a site-specific prognostic marker, as mentioned by the AJCC Cancer Staging Manual, but it remains to be clearly defined. We aimed to identify an optimal characterization of PN as a component of cancer staging. On the basis of the anatomic features of the nervous system of the large bowel, site-specific pathologic criteria were assigned to PN according to the location of PN. Multi-institutional pathologic review based on these criteria was performed for 962 patients with stage I to III CRC at 2 institutions (1999 to 2004, cohort 1) and 1883 patients from 8 other institutions (2000 to 2004, cohort 2). In cohort 1, intramural and extramural PN were observed in 152 and 101 patients, respectively, which had a different impact on disease-free survival (hazard ratio, 2.6 [1.9 to 3.5] vs. 4.7 [3.4 to 6.5], respectively). A 3-tiered grading system (Pn0; Pn1a, intramural PN; Pn1b, extramural PN) distinguished 5-year disease-free survival as 88%, 70%, and 48%, respectively; and multivariate analysis identified PN grade as a significant prognostic marker independent of T or N stage. These results were similar in cohort 2. Interinstitutional difference of the prognostic impact of PN grade was acceptably small among all institutions. Interobserver study among 6 gastrointestinal pathologists showed superior judgment reproducibility for PN compared with vascular invasion. The results of our study indicate that PN is an important prognostic marker in CRC. The value of cancer staging could be enhanced by PN assessment using site-specific criteria and a simple grading system based on PN location within the bowel.