To reduce postoperative local recurrence in patients who undergo a nerve preserving operation for rectal carcinoma, preoperative estimation of neural invasion would be desirable. For this purpose we clarified the characteristics of rectal carcinomas with neural invasion and then evaluated the usefulness of matrix metalloproteinase 7 (MMP7) gene as an indicator for neural invasion. The study included 128 patients with primary rectal carcinoma. The histologic examination plus immunohistochemical study for S-100 protein was performed. A reverse transcription-polymerase chain reaction (RT-PCR) study for MMP7 using preoperatively obtained biopsy specimens was also performed in 32 patients. Neural invasion was recognized in 38 (29.7%) of 128 tumors. The tumors with neural invasion were characterized by infiltrative growth pattern, frequent lymphatic and venous permeation, frequent lymph node metastasis, and advanced stage of disease. The cases with neural invasion also showed a higher recurrent rate and worse prognosis. An RT-PCR study demonstrated that a significantly higher expression of MMP7 mRNA was recognized in neural invasion positive cases than in negative ones (p<0.05), indicating that MMP7 may be a good indicator for neural invasion of rectal carcinoma. Neural invasion would be an additional useful factor for providing information on malignant potential. The RT-PCR results of MMP7 gene may be useful for predicting which tumors may develop neural invasion.