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Purpose: To assess the increase in hospital costs associated with postoperative complications after lower anterior resection (LAR) for rectal cancer. Methods: The subjects of this retrospective analysis were patients who underwent elective LAR surgery between April, 2015 and March, 2017, collected from a Japanese nationwide gastroenterological surgery registry linked to hospital-based claims data. We evaluated total and category-specific hospitalization costs based on the level of postoperative complications categorized using the Clavien–Dindo (CD) classification. We assessed the relative increase in hospital costs, adjusting for preoperative factors and hospital case volume. Results: We identified 15,187 patients (mean age 66.8) treated at 884 hospitals. Overall, 71.8% had no recorded complications, whereas 7.6%, 10.8%, 9.0%, 0.6%, and 0.2% had postoperative complications of CD grades I–V, respectively. The median (25th–75th percentiles) hospital costs were $17.3 K (16.1–19.3) for the no-complications group, and $19.1 K (17.3–22.2), $21.0 K (18.5–25.0), $27.4 K (22.4–33.9), $41.8 K (291–618), and $22.7 K (183–421) for the CD grades I–V complication groups, respectively. The multivariable model identified that complications of CD grades I–V were associated with 11%, 21%, 61%, 142%, and 70% increases in in-hospital costs compared with no complications. Conclusions: Postoperative complications and their severity are strongly associated with increased hospital costs and health-care resource utilization. Implementing strategies to prevent postoperative complications will improve patients' clinical outcomes and reduce hospital care costs substantially. [ABSTRACT FROM AUTHOR]