652 Background: Tumor budding (TB) represents the epithelial-mesenchymal transition (EMT) and is a novel marker that predicts metastasis and poor survival in patients with colorectal cancer. Although recent preclinical studies have elucidated the interaction between the EMT process and tumor microenvironment (TME), the clinicopathological correlation between TB and TME remains unclear. Methods: Formalin-fixed paraffin-embedded blocks of specimens were obtained from patients with stage III colorectal cancer who underwent surgical resection and adjuvant chemotherapy at our institution between January 2009 and July 2012. TB, tumor stroma percentage (TSP), and inflammatory reaction (IR) graded using the Klintrup-Mäkinen method were evaluated on hematoxylin and eosin sections. The densities of CD8+ T-cells at the tumor centers and invasive margins were analyzed using immunohistochemistry and digital image analysis. Cox proportional hazards models were used to assess the effect of clinicopathological variables on relapse-free survival (RFS). Results: One hundred and ninety-five patients were included in this analysis. The median age was 62 years (range 32–84 years). The median follow-up duration of this study was 5.8 years. High TB ( > 5 buds/0.785 mm2) was observed in 106 patients (54.4%) and was associated with high TSP (P < 0.01), but not with IR and CD8 expression. Multivariate analysis, including clinicopathological factors such as histology, TB, TSP, and IR revealed that high TB was an independent poor prognostic factor (hazard ratio, 1.89; 95% confidence interval, 1.04–3.45; P = 0.04). Patients with high TB and low IR (21.0%) exhibited a shorter survival than others; the 5-year RFS rates were 82.7%, 81.1%, 78.4%, and 40.8% in patients with low TB and high IR, low TB and IR, high TB and high IR, and high TB and low IR, respectively. Conclusions: Our study demonstrated that high TB was an adverse prognostic factor, regardless of TME status. The combined analysis of TB plus IR could improve prognostic value in patients with stage III colorectal cancer. Patients with high TB and low IR may need novel therapeutic approaches.