We evaluated the functional and oncological outcome of ultralow anterior resection and coloanal anastomosis (CAA), which is a popular technique for preserving anal sphincter in patients with distal rectal cancer. Forty-eight patients were followed up for 6-100 months regarding fecal or gas incontinence, frequency of bowel movement, and local or systemic recurrence. The main operative techniques were total mesorectal excision with autonomic nerve preservation; the type of anastomosis was straight CAA, performed by the perianal hand sewn method in 38 cases and by the double-stapled method in 10. Postoperative complications included transient urinary retention (n=7), anastomotic stenosis (n=3), anastomotic leakage (n=3), rectovaginal fistula (n=2), and cancer positive margin (n=1; patient refused reoperation). Overall there were recurrences in seven patients (14.5%): one local and one systemic recurrence in stage B2; and one local, two systemic, and two combined local and systemic in C2. The mean frequency of bowel movements was 6.1 per day after 3 months, 4.4 after 1 year, and 3.1 after 2 years. The Kirwan grade for fecal incontinence was 2.7 after 3 months, 1.8 after 1 year, and 1.5 after 2 years. With careful selection of patients and good operative technique, CAA can be performed safely in distal rectal cancer. Normal continence and acceptable frequency of bowel movements can be obtained within 1 year after operation without compromising the rate of local recurrence.