One hundred nine obstetrical palsy patients with defective shoulder abduction and external rotation had subscapularis release and transfer of teres major to infraspinatus with or without pedicle transfer of the clavicular head of pectoralis major to deltoid. The age at surgery averaged 67 months (11-192) and follow-up averaged 36 months (12-80). Thirty-nine cases had follow-up CT scan of both shoulders. Improvement of abduction averaged 64 degrees and that of external rotation 50 degrees, 100% and 290% gain, respectively. Both negatively correlated with the age at surgery (P < 0.001), and were significantly higher in patients operated younger than 4 years. On computed tomographic scans, the degree of glenoid retroversion positively correlated (P < 0.001) with the age at surgery, and was significantly higher in patients operated older than 4 years. The degree of posterior subluxation showed no significant difference between different ages. There was no significant difference between the operated and normal sides in patients operated younger than 4years with regard to glenoid retroversion and in those operated younger than 2 years with regard to posterior subluxation. The operation is useful for correction of defective shoulder abduction and external rotation in obstetric palsy. It is best performed before the age of 2 to get maximal improvement in motion and prevent secondary bone changes. Between the ages of 2 and 4, it also resulted in significant improvement in motion and prevented glenoid retroversion, but not posterior subluxation. After the age of 4, the improvement in motion was not significant and secondary bone changes were not prevented.