This nationwide prospective study was designed to determine prognostic factors and evaluate the outcome of different treatments of Perthes' disease. A total of 28 hospitals in Norway were instructed to report all new cases of Perthes' disease over a period of five years and 425 patients were reported and followed for five years. Of these, 368 with unilateral disease were included in the present study. The hips were classified radiologically according to a modified two-group Catterall classification and the lateral pillar classification. A total of 358 patients (97%) attended the five-year follow-up, when a modified three-group Stulberg classification was used as a radiological outcome measure. For patients over six years of age at diagnosis and with more than 50% necrosis of the femoral head (152 patients), the surgeons at the different hospitals had chosen one of three methods of treatment: physiotherapy (55 patients), the Scottish Rite abduction orthosis (26), and proximal femoral varus osteotomy (71). Of these hips, 146 (96%) were available for the five-year follow-up. The strongest predictor of outcome was femoral head involvement of more or less than 50% (odds ratio (OR) = 7.76, 95% confidence interval (CI) 2.82 to 21.37), followed by age at diagnosis (OR = 0.98, 95% CI 0.92 to 0.99) and the lateral pillar classification (OR = 0.62, 95% CI 0.40 to 0.98). In children over six years at diagnosis with more than 50% of femoral head necrosis, proximal femoral varus osteotomy gave a significantly better outcome than orthosis (p = 0.001) or physiotherapy (p = 0.001). There was no significant difference between the physiotherapy and orthosis groups (p = 0.36), and we found no difference in outcome after any of the treatments in children under six years (p = 0.73). We recommend proximal femoral varus osteotomy in children aged six years and over at the time of diagnosis with hips having more than 50% femoral head necrosis. The abduction orthosis should be abandoned in Perthes' disease.