A total of 455 patients aged over 70 years with a displaced intracapsular fracture of the proximal femur was randomised to be treated either by hemiarthroplasty or internal fixation. The preoperative characteristics of the patients in both groups were similar. Internal fixation has a shorter length of anaesthesia (36 minutes versus 57 minutes, p < 0.0001), lower operative blood loss (28 ml versus 177 ml, p < 0.0001) and lower transfusion requirements (0.04 units versus 0.39 units, p < 0.0001). In the internal fixation group 90 patients required 111 additional surgical procedures while only 15 additional operations on the hip were needed in 12 patients in the arthroplasty group. There was no statistically significant difference in mortality between the groups at one year (61/226 versus 63/229, p = 0.91), but there was a tendency for an improved survival in the older less mobile patients treated by internal fixation. For the survivors assessed at one, two and three years from injury there were no differences with regard to the outcome for pain and mobility. Limb shortening was more common after internal fixation (7.0 mm versus 3.6 mm, p = 0.004). We recommend that displaced intracapsular fractures in the elderly should generally be treated by arthroplasty but that internal fixation may be appropriate for those who are very frail.