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Objectives This study aimed to investigate the differentiation state and clinical significance of colorectal cancer cells, as well as to predict the immune response and prognosis of patients based on differentiation-related genes of colorectal cancer. Introduction Colorectal cancer cells exhibit different differentiation states under the influence of the tumor microenvironment, which determines the cell fates. Methods We combined single-cell sequencing (scRNA-seq) data from The Cancer Genome Atlas source with extensive transcriptome data from the Gene Expression Omnibus database. We obtained colorectal cancer differentiation-related genes using cell trajectory analysis and developed a colorectal cancer differentiation-related gene based molecular typing and prognostic model to predict the immune response and prognosis of patients with colorectal cancer. Results We identified 5 distinct cell differentiation subsets and 620 colorectal cancer differentiation-related genes. Colorectal cancer differentiation-related genes were significantly associated with metabolism, angiogenesis, and immunity. We separated patients into 3 subtypes based on colorectal cancer differentiation-related gene expression in the tumor and found differences among the different subtypes in immune infiltration status, immune checkpoint gene expression, clinicopathological features, and overall survival. Immunotherapeutic interventions involving a highly expressed immune checkpoint blockade may be selectively effective in the corresponding cancer subtypes. We built a risk score prediction model (5-year AUC: .729) consisting of the 4 most important predictors of survival (TIMP1, MMP1, LGALS4, and ITLN1). Finally, we generated and validated a nomogram consisting of the risk score and clinicopathological variables. Conclusion This study highlights the significance of genes involved in cell differentiation for clinical prognosis and immunotherapy in patients and provides prospective therapeutic targets for colorectal cancer.