Twenty-one patients with lateral compartment osteoarthritis and valgus deformity of the knee underwent distal femoral supracondylar osteotomy (medial closing wedge) between 1983 and 1993 with follow-up ranging from 1 to 8 years. Ten knees had plaster cast immobilization, 5 had fixation with 2 staples supplemented with a plaster cast, and 6 knees had rigid internal fixation with an AO blade plate. Thirty-three percent of patients had a satisfactory result using the HSS score, and 57% had a satisfactory result using the Knee Society Clinical Rating. Fifty-seven percent had a significant complication, including severe knee stiffness requiring manipulation under anesthesia (48%), nonunion/delayed union (19%), infection (10%), and fixation failure (5%). Five (19%) knees required total knee replacement within 5 years of surgery. Satisfactory results were obtained only in those patients who had less severe degrees of osteoarthritis confined to the lateral compartment (grades I to III), adequate correction of valgus deformity (the anatomical axis within 2 degrees from zero), and rigid internal fixation to permit postoperative early mobilization. These results indicate that distal femoral osteotomy is a satisfactory procedure in the young, active patient with osteoarthritis of the lateral compartment of the knee, but requires precise surgical technique and rigid internal fixation.