Magnetic Resonance Imaging (MRI) has established itself as the optimal method for assessing local staging in patients with rectal cancer. This is due to several factors including, most importantly, the ability to accurately delineate the mesorectal fascia and thus determine which rectal tumours threaten the circumferential resection margin (CRM). It is also able to assess depth of tumour penetration into the mesorectum and thus identify those tumours considered high risk for disease recurrence. MRI is the optimal imaging modality to assess local nodal involvement and extramural venous invasion, which has now been recognised as a poor prognostic factor for both local recurrence and overall survival rates. The use of MRI for evaluating tumours both during and after pre-operative therapies is of increasing importanceand can influence the timing of surgery if patients undergo pathological complete response or show aggressive disease warranting more intensive treatment. This review examines the current status of MRI in the local staging and management of rectal cancer. The focus of the review is to identify the important prognostic features demonstrated on MRI and to assess the influence of these tumour characteristics on treatment decision-making.