Cohorts of 3-6 patients receive escalating doses of oxaliplatin until the maximum tolerated dose (MTD) is determined. The MTD is defined as the dose preceding that at which 2 of 6 patients experience dose-limiting toxicity. Once the MTD is determined, additional patients are treated at that dose level in the phase II portion of the study. (Phase I closed to accrual effective 03/27/2003). Patients may undergo radical resection of rectal tumor within 4-6 weeks after completion of chemoradiotherapy.