Constriction of the lower limb by congenital amniotic band has been proposed to explain the development of pseudoarthrosis of tibia and fibula. We report a case of amniotic band syndrome in a preterm infant with pseudoarthrosis of tibia and fibula. Simple release of constriction band with Z-plasty resulted in the growth of mature bone, replacing the pseudoarthrosis and hence did not require surgical amputation. Our case confirms the potential for bone growth in ABS, once the constricting band is released. Early limb preserving surgery with release of the constricting band with an intention to salvage the limb appears appropriate.