Background and Objectives: Sarcopenia, a condition characterized by muscle mass loss, is prevalent in up to 68% of rectal cancer patients and has been described as a negative prognostic factor, impacting overall survival and tumor response. While there are extensive data on rectal cancer globally, only a handful of studies have evaluated the role of sarcopenia in locally advanced rectal cancer (LARC). Our study aimed to investigate the relationship between sarcopenia, overall response rate, and toxicity in patients who underwent total neoadjuvant treatment (TNT) for LARC. Materials and Methods: We performed a retrospective study of patients with rectal cancer treated with TNT and surgery with curative intent between 2021 and 2023 at Prof. Dr. Ion Chiricuta Institute of Oncology, Cluj-Napoca. Sarcopenia was assessed on MRI images by measuring the psoas muscle area (PMA) at the level of the L4 vertebra before and after neoadjuvant therapy. The primary endpoints were the overall complete response rate (oCR) and acute toxicity. Results: This study included 50 patients with LARC. The oCR rate was 18% and was significantly associated with post-treatment sarcopenia (OR 0.08, p = 0.043). Patients who did not achieve a clinical or pathologic complete response had, on average, an 8% muscle loss during neoadjuvant therapy (p = 0.022). Cystitis and thrombocytopenia were significantly associated with post-treatment sarcopenia (p = 0.05 and p = 0.049). Conclusions: Sarcopenia and loss of psoas muscle during neoadjuvant therapy were negatively associated with tumor response in locally advanced rectal cancer. Thrombocytopenia and cystitis are more frequent in sarcopenic than non-sarcopenic patients undergoing neoadjuvant chemoradiation for rectal cancer.