The initial study reporting the accuracy of an optically tracked endorectal ultrasound (TERUS) probe for the purpose of improving the staging of rectal cancer is presented here. In this work we describe the need for a more accurate ERUS system and why the incorporation of image guidance makes this goal feasible. A rectal phantom was constructed with five targets placed in positions where tumors normally occur. The locations of these targets were found using two different imaging modalities, CT and ultrasound, and the target registration error (TRE) between these two image sets was calculated. The average TRE of 33 image captures of the five targets using TERUS was 2.1 mm. This is a promising outcome because the desired tumor margins for rectal cancer are on the order of centimeters. These preliminary results support the proof of concept for a TERUS system that should improve ultrasound imaging in rectal cancer.