Sixteen infants with conducting neuromas-in-continuity at primary brachial plexus exploration underwent microsurgical neurolysis of their lesions. For each patient, the immediate preoperative scores for individual joint movements were compared with scores at the last examination. In the Erb's palsy group (n = 9), significant improvement was seen in shoulder movements, elbow flexion, supination, and wrist extension (paired t test, p < 0.05). Clinically useful improvements in function was seen at the shoulder and elbow (Fisher's exact test, p < 0.05). In the total palsy group (n = 7), significant improvement in shoulder abduction, shoulder adduction, elbow flexion, and extension of the wrist, fingers, and thumb was seen (paired t test, p < 0.05), but there was no significant improvement in the proportion of patients with useful functional outcomes. Neurolysis in Erb's palsy improves both muscle grade and the functional ability of patients. Neurolysis does not provide useful functional recovery in patients with total plexus palsy.