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Frozen shoulder is often a self-limited disease, but approximately 10% of patients have long-term problems. Arthroscopy was done in 40 patients with persistent pain, stiffness, and functional loss for at least 1 year without improvement despite conventional treatment. In the first 20 patients, manipulation was done with an arthroscopy before and afterward; in the second 20 patients, the contracted structures were divided through arthroscopy. This was a prospective cohort study; 2 patients were not available for followup. The arthroscopic division procedure was done in 4 sequential steps: (1) resection of the inflammatory synovium in the interval area between the subscapularis and supraspinatus; (2) progressive division of the anterior superior gleno-humeral ligament and anterior capsule; (3) division of the subscapularis tendon but not muscle; and (4) division of the inferior capsule. The results were assessed independently on the basis of pain, stiffness, and function. The followup varied from 2 to 5 years after intervention. Patients treated with arthroscopy and manipulation did as well as the patients treated with arthroscopic division for restoration of range of movement. However, the patients in the arthroscopic division group had significantly better pain relief and restoration of function. Fifteen of 20 patients treated with arthroscopic division had an excellent result compared with 7 of 18 patients treated with arthroscopy and manipulation. Patients with diabetes did worse initially, but the outcome was similar to patients without diabetes. Patients with diabetes in particular may benefit from early intervention.