SUMMARY: Limitation of internal rotation has been reported in conjunction with impingement syndrome of the shoulder. A group of 9 patients was identified who had discrete, painful loss of internal rotation associated with refractory impingement syndrome. The duration of symptoms averaged 18 months (range, 11 to 33 months), and all patients failed a course of physical therapy specifically addressing loss of internal rotation. Six patients reported traction as the mechanism of injury, and 3 developed motion loss and pain following a posterior capsular shift procedure. All patients underwent arthroscopy, and were observed to have a thickened posterior capsule. An arthroscopic release of the posterior capsule improved motion in all patients, with substantial relief of pain. At an average of 19 months follow-up (range, 11 to 35 months), internal rotation in 90 degrees of abduction improved from 10 degrees preoperatively to 47 degrees postoperatively, and there were no complications related to the procedure. We conclude that chronic loss of internal rotation secondary to posterior capsular contracture may be an explanation for refractory pain in some patients with an initial diagnosis of impingement syndrome. This condition appears to be amenable to arthroscopic posterior capsular release.