OBJECTIVE:: To compare transanal endoscopic microsurgery (TEMS) with conventional transanal excision (TAE) in terms of the quality of resection, local recurrence, and survival rates in patients with stage I rectal cancer. BACKGROUND:: Although TEMS is often considered a superior surgical technique to TAE, it is poorly suited for excising tumors in the lower third of the rectum. Such tumors may confer a worse prognosis. METHODS:: We retrospectively reviewed information on all patients with stage pT1 and pT2 rectal adenocarcinoma who underwent local excision from 1997 through mid-2006. We excluded patients with node-positive, metastatic, recurrent, previously irradiated, or snare-excised tumors. RESULTS:: Our study included 42 TEMS and 129 TAE patients. We found no significant differences in patient characteristics, adjuvant therapy, tumor stage, or adverse histopathologic features. In the TAE group, 52 (40%) of tumors were <5 cm from the anal verge (AV); in the TEMS group, only 1 (2%) (P = 0.0001). Surgical margins were less often positive in the TEMS group (2%) than in the TAE group (16%) (P = 0.017). For patients with tumors ≥5 cm from the AV, the estimated 5-year disease-free survival (DFS) rate was similar between the TEMS group (84.1%) and the TAE group (76.1%) (P = 0.651). But within the TAE group, the estimated 5-year DFS rate was better for patients with tumors ≥5 cm from the AV (76.1%) vs. <5 cm from the AV (60.5%) (P = 0.029). In our multivariate analysis, the tumor distance from the anal verge, the resection margin status, the T stage, and the use of adjuvant therapy-but not the surgical technique (i.e., TEMS or TAE) itself-were independent predictors of local recurrence and DFS. CONCLUSIONS:: The quality of resection is better with TEMS than with TAE. However, the apparently better oncologic outcomes with TEMS can be partly explained by case selection of lower-risk tumors of the upper rectum.