Background: The adequate distal resection margin is still controversial in rectal cancer treated by neoadjuvant chemoradiotherapy (nCRT). The aim of this study was to assess the impact of a distal margin of ≤1 mm on locoregional recurrence-free survival (LRRFS). Methods: Among 255 patients treated with nCRT and surgery at the National Cancer Institute of Milan, 83 (32.5%) had a distal margin of ≤1 mm and 172 (67.5%) had a distal margin of >1 mm. Survival analyses were performed to assess the impact of distal margin on 5-year LRRFS, as well as Cox survival analysis. The role of distal margin on survival was analyzed according to different tumor regression grades (TRGs). Results: The overall 5-year LRRFS rate was 77.6% with a distal margin of ≤1 mm vs. 88.3% with a distal margin of >1 mm (Log-rank p = 0.09). Only stage ypT4 was an independent predictor of worse LRRFS (HR 15.14, p = 0.026). The 5-year LRRFS was significantly lower in TRG3–5 patients with a distal margin of ≤1 mm compared to those with a distal margin of >1 mm (68.5% vs. 84.2%, p = 0.027), while no difference was observed in case of TRG1–2 (p = 0.77). Conclusions: Low-responder rectal cancers after nCRT still require a distal margin of >1 mm to reduce the high likelihood of local relapse.