Background: Shoulder internal rotation contracture is the most common deformity affecting the shoulder in patients with Erb's palsy. With progression of the deformity, the glenohumeral joint become more dysplastic which may lead to severe functional impairment of the affected limb. Aim of the Work: was to evaluate the functional outcome of external humeral rotational osteotomy. Patients and Methods: This is a prospective study on 10 patients with Erb's palsy who underwent external humeral rotational osteotomy. In this study the patients were evaluated for improvement of abduction and external rotation of shoulder after at least 6 months of operation. Results: The mean preoperative external rotation improved from -40° to 41° and the mean preoperative abduction improved from 135° to 150°. The mean mallet score for preoperative external rotation improved from 2.20 to 4 and the mean mallet score for preoperative abduction show no difference as all patients could raise their arms above 90 degree pre and postoperatively. Conclusion: External humeral rotational osteotomy improves shoulder function in patients with brachial plexus birth palsy suffering from internal rotation contracture associated with advanced glenohumeral joint deformity.