Abstract Introduction: Rectal cancer continues to be devastating malignancy worldwide. Sphincter preservation is the need of the hour. Distal anastomosis is more prone to leaks. Proximal diversion in form of ileostomy may be used to protect distal anastomosis. Aim: To compare two groups of low anterior resection with and without diversion ileostomy in rectal cancer patients. Material and methods: A prospective, hospital based study of 78 rectal carcinoma patients were taken for the study. Inclusion criteria was operable rectal cancer 4–12 cm from anal verge. Patients were randomized into two groups. Group – A (34 patient) patients with low anterior resection with ileostomy (LAR with ileostomy); Group – B (44 patients) patients with low anterior resection without ileostomy (LAR without ileostomy). Quality of life was assessed by scoring done by self designed method. A total score of 0–20 given for various parameters. Results: Skin excoriation was the commonest complication. Stomal retraction and stomal obstruction was seen in 1 patient each (3%). Hypokalemia was the commonest electrolyte imbalance present in ileostomy group. Anastomotic leak was present in 6% of Group A and 11% of Group B patients. Mean time of closure of ileostomy was 16 ± 4.3 weeks. Conclusion: LAR with ileostomy has certain advantages over LAR without ileostomy in terms of anastomotic leak, postoperative ileus, resumption of diet, wound infection, small bowel obstruction and in terms mortality and recurrence. However stoma related complications were main disadvantage in LAR with ileostomy.