Tumor budding is an increasingly important prognostic feature for pathologists to recognize. The aim of this study was to correlate intra-tumoral budding in pre-treatment rectal cancer biopsies with pathological response to neoadjuvant chemoradiotherapy and with long-term outcome. Data from a prospectively maintained database were acquired from patients with locally advanced rectal cancer who underwent neoadjuvant chemoradiotherapy. Pre-treatment rectal biopsies were retrospectively reviewed for evidence of intra-tumoral budding. Multivariate logistic regression was used to identify factors contributing to cancer-specific death, expressed as hazard ratios with 95% confidence intervals. Of the 185 patients with locally advanced rectal cancer, 89 patients met the eligibility criteria, of whom 18 (20%) exhibited budding in a pre-treatment tumor biopsy. Intra-tumoral budding predicted a poor pathological response to neoadjuvant chemoradiotherapy (higher ypT stage, P=0.032; lymph node involvement, P=0.018; lymphovascular invasion, P=0.004; and residual poorly differentiated tumors, P=0.005). No patient with intra-tumoral budding exhibited a tumor regression grade 1 or complete pathological response, providing a 100% specificity and positive predictive value for non-response to neoadjuvant chemoradiotherapy. Intra-tumoral budding was associated with a lower disease-free 5-year survival rate (33 vs 78%, P<0.001), cancer-specific 5-year survival rate (61 vs 87%, P=0.021) and predicted cancer-specific death (hazard ratio 3.51, 95% confidence interval 1.03-11.93, P=0.040). Intra-tumoral budding at diagnosis of rectal cancer identifies those who will poorly respond to neoadjuvant chemoradiotherapy and those with a poor prognosis.