Objective To examine the association between substaging and outcomes following radical cystectomy (RC) in patients with stage III bladder cancer. Methods We conducted a retrospective observational study using nationwide data from Japan, including 708 patients with stage III bladder cancer who underwent RC. Substaging was based on the American Joint Committee on Cancer's 8th edition. pT3‐4aN0 and pTanyN1 were newly defined as stage IIIA, while pTanyN2‐3 were defined as stage IIIB. Baseline covariates were balanced using inverse probability of treatment weighting. We analyzed disease‐free survival (DFS) and overall survival (OS) across these substages and among the sub‐groups: pT3‐4aN0, pTanyN1, and pTanyN2‐3. Results We found evidence that stage IIIB bladder cancer had inferior outcomes than stage IIIA (DFS, hazard ratio, 1.61 [95% confidence interval, 1.28–2.02]; OS, 1.61 [1.25–2.09]). Furthermore, there was evidence of the difference in outcomes between pT3‐4aN0 versus pTanyN2‐3 (DFS, 1.73 [1.35–2.23]; OS, 1.63 [1.23–2.15]), while no evidence of the difference between pT3‐4aN0 and pTanyN1 was observed (DFS, 1.27 [0.96–1.67]; OS, 1.09 [0.78–1.53]). We did not find evidence of heterogeneity in the effects of the substaging on OS by the use of perioperative chemotherapy. Conclusion This prognostic study supports the current stage III substaging of patients with bladder cancer who underwent RC. Importantly, there was no difference in OS between pT3‐4N0 and pTanyN1 in patients with stage IIIA bladder cancer. These findings may help guide treatment decisions for patients with stage III operable bladder cancer.