Narakas classified babies with obstetric palsy into four groups: upper Erb's, extended Erb's, total palsy, and total palsy with a Horner. Over the last 15 years, it was noted at our obstetric palsy clinic that good spontaneous recovery in newborns with extended Erb's palsy (C5, C6, C7 injury) was more likely if they recovered active wrist extension against gravity before 2 months of age. A hypothesis was made that newborns with extended Erb's palsy (Narakas Group II) may be subclassified into two groups according to this 'early recovery of wrist extension.' In a retrospective study of 581 cases with strict inclusion criteria, the hypothesis was found to be true: patients with extended Erb's and 'early recovery of wrist extension' have significantly higher percentages of good spontaneous recovery of limb function than those with extended Erb's and 'no early recovery of wrist extension' (P<0.0001 by chi-squared test).