A retrospective study of the results of latissimus dorsi and teres major transfer in the treatment of Erb's palsy was conducted in 10 patients. All patients underwent release of the pectoralis major and transfer of the latissimus dorsi and teres major tendons to the rotator cuff at a mean age of 7 years and 2 months. Range of motion, patient satisfaction, and presence of any complications were evaluated postoperatively at a mean of 3 years. Active shoulder abduction improved from a mean of 72 degrees preoperatively to 136 degrees postoperatively. Postoperative shoulder active external rotation averaged 64 degrees. Subjectively, all patients participating in a questionnaire thought use of the operated-on extremity had improved since surgery. All but one patient were satisfied with the final outcome. Complications included one hypertrophic scar. Transfer of the latissimus dorsi and teres major to the rotator cuff in treatment of persistent Erb's palsy improves shoulder abduction and external rotation and results in a high degree of patient satisfaction.