A 44-year-old woman with Lynch syndrome was referred to our hospital for treatment of recurrence of microsatellite instability-high rectal cancer. [18F]Fluorodeoxyglucose (18FDG)-positron emission tomography revealed a peritoneal metastasis with invasion to the small intestine and left ureter. The peritoneal metastasis was diagnosed initially as unresectable because of extensive invasion to the left ureter requiring nephrectomy. Hence, first-line treatment with pembrolizumab was started. After the first course of pembrolizumab, she developed hydronephrosis and a resulting urinary tract infection (UTI). A percutaneous nephrostomy was performed to control the UTI. After six courses of pembrolizumab, 18FDG-positron emission tomography showed that the peritoneal metastasis was smaller with significantly reduced 18FDG uptake, and it was then diagnosed as resectable without nephrectomy. She underwent R0 resection of the peritoneal metastasis with partial resection of the small intestine. Intraoperatively, the peritoneal metastasis showed no invasion of the left ureter, allowing its preservation. The percutaneous nephrostomy was removed postoperatively, and she has not developed any subsequent UTIs. Histopathologically, the tumor showed a pathological complete response to pembrolizumab. To the best of our knowledge, this is the first case of conversion therapy with pembrolizumab for peritoneal metastasis with hydronephrosis.