Dr Kirsty Danielson, who is based at the university's department of surgery and anaesthesia in Wellington, has received an Emerging Research First Grant of almost $250,000 from the Health Research Council for her three-year study.
New Zealand has one of the highest rates of bowel or colorectal cancer in the world, leading to about 1200 deaths every year.
The study will use RNA-sequencing technology to discover potential RNA biomarkers for early diagnosis of cancer, and to predict how patients will respond to radiation therapy.
Tumour cells release RNA molecules that circulate in the blood plasma of people who suffer from cancer.
Dr Danielson, who would run the study with the assistance of PhD students and surgical staff at Wellington Hospital, said the news she had received funding was "fantastic".
"I am really grateful to the Health Research Council for the opportunity to do it."
With the assistance of Wellington Hospital, Dr Danielson already had access to a biobank of samples to use in the study.
Testing blood was far less invasive than taking tissue samples from the tumour itself, which was not always possible, anyway, she said.
Studying the biomarkers would hopefully help researchers tell which patients would benefit from radiation therapy, and in the longer term Dr Danielson hoped it would be possible to develop a screening tool for the general population.
It was a question of developing a test for biomarkers that was specific and sensitive enough that it would not miss markers or give false positive results, she said.
If cancer was caught in its earliest stage, the survival rate of patients was about 90% higher, Dr Danielson said.
While most of the work would be carried out in Wellington, the researchers would also be sending samples to the Dana-Farber Cancer Institute in Boston.
There was no simple answer to why New Zealand's bowel cancer rate was so high, though it had been blamed on factors such as diet and lifestyle, she said.
Another Wellington-based University of Otago researcher, Dr Rebecca Dyson, was given $250,000 to research whether omega-3 could reduce cardiovascular dysfunction in children born prematurely.
Three academics working out of the Christchurch campus received grants of about $250,000 each.
Dr Rachel Purcell was also researching bowel cancer, examining differences in gut microbiome, Dr Sarah Appleby was looking at the role of myoregulin in cardiovascular disease, and Dr Aaron Stevens was studying inflammation and ageing.
In Dunedin, Dr Kate Thomas was looking at cardiovascular fitness in patients waiting for hip or knee joint replacement surgery.