Background: Despite improvements in the multimodality treatment for patients with locally recurrent rectal cancer (LRRC), oncological outcomes remain poor. This study evaluated the effect of induction chemotherapy and subsequent chemo(re)irradiation on the pathologic response and the rate of resections with clear margins (R0 resection) in relation to long-term oncological outcomes. Methods: All consecutive patients with LRRC treated in the Catharina Hospital Eindhoven who underwent a resection after treatment with induction chemotherapy and subsequent chemo(re)irradiation between January 2010 and December 2018 were retrospectively reviewed. Induction chemotherapy consisted of CAPOX/FOLFOX. Endpoints were pathologic response, resection margin and overall survival (OS), disease free survival (DFS), local recurrence free survival (LRFS), and metastasis free survival (MFS). Results: A pathologic complete response was observed in 22 patients (17%), a “good” response (Mandard 2–3) in 74 patients (56%), and a “poor” response (Mandard 4–5) in 36 patients (27%). An R0 resection was obtained in 83 patients (63%). The degree of pathologic response was linearly correlated with the R0 resection rate (p = 0.026). In patients without synchronous metastases, pathologic response was an independent predictor for LRFS, MFS, and DFS (p = 0.004, p = 0.003, and p = 0.024, respectively), whereas R0 resection was an independent predictor for LRFS and OS (p = 0.020 and p = 0.028, respectively). Conclusions: Induction chemotherapy in addition to neoadjuvant chemo(re)irradiation is a promising treatment strategy for patients with LRRC with high pathologic response rates that translate into improved oncological outcomes, especially when an R0 resection has been achieved.