Abstract Purpose: Preoperative chemoradiotherapy (CRT) and surgical resection are the standard treatment for locally advanced rectal cancer (LARC). Combining immune checkpoint inhibitors with radiation suggests a promising approach for enhancing efficacy. We investigated the efficacy of CRT followed by nivolumab and surgery in patients with LARC. Patients and Methods: In phase I, we investigated the feasibility of sequentially combined CRT, 5 cycles of nivolumab, and radical surgery. In phase II, patients with microsatellite stable (MSS) and microsatellite instability-high (MSI-H) LARC were evaluated. Results: Three patients in phase I received full courses of CRT and nivolumab without dose modification; the schedule was recommended for phase II. A pathologic complete response (pCR) was centrally confirmed in 30% [11/37; 90% confidence interval (CI), 18%–44%] and 60% (3/5) of the MSS and exploratory MSI-H cohorts, respectively. While immune-related severe adverse events were observed in 3 patients, no treatment-related deaths were observed. In 38 patients with MSS who underwent surgery, pCR rates of 75% (6/8) and 17% (5/30; P = 0.004, Fisher exact test) were observed in those with programmed cell death ligand 1 (PD-L1) tumor proportion score ≥1% and <1%, respectively; IHC staining was performed using pre-CRT samples. In 24 patients with MSS, pre-CRT samples were analyzed by flow cytometry; pCR rates of 78% (7/9) and 13% (2/15; P = 0.003, Fisher exact test) were observed for CD8+ T cell/effector regulatory T cell (CD8/eTreg) ratios of ≥2.5 and <2.5, respectively, in tumor-infiltrating lymphocytes. Conclusions: CRT followed by consolidation nivolumab could increase pCR. PD-L1 expression and an elevated CD8/eTreg ratio were positive predictors in patients with MSS LARC.