Aims. Developmental dysplasia of the hip (DDH) is a complex musculoskeletal disease that occurs mostly in children. This study aimed to investigate the molecular changes in the hip joint capsule of patients with DDH. Methods. High-throughput sequencing was used to identify genes that were differentially expressed in hip joint capsules between healthy controls and DDH patients. Biological assays including cell cycle, viability, apoptosis, immunofluorescence, reverse transcription polymerase chain reaction (RT-PCR), and western blotting were performed to determine the roles of the differentially expressed genes in DDH pathology. Results. More than 1,000 genes were differentially expressed in hip joint capsules between healthy controls and DDH. Both gene ontology (GO) and Kyoto Encyclopedia of Genes and Genomes (KEGG) analyses revealed that extracellular matrix (ECM) modifications, muscle system processes, and cell proliferation were markedly influenced by the differentially expressed genes. Expression of Collagen Type I Alpha 1 Chain (COL1A1), COL3A1, matrix metalloproteinase-1 (MMP1), MMP3, MMP9, and MMP13 was downregulated in DDH, with the loss of collagen fibres in the joint capsule. Expression of transforming growth factor beta 1 (TGF-β1) was downregulated, while that of TGF-β2, Mothers against decapentaplegic homolog 3 (SMAD3), and WNT11 were upregulated in DDH, and alpha smooth muscle actin (αSMA), a key myofibroblast marker, showed marginal increase. In vitro studies showed that fibroblast proliferation was suppressed in DDH, which was associated with cell cycle arrest in G0/G1 and G2/M phases. Cell cycle regulators including Cyclin B1 (CCNB1), Cyclin E2 (CCNE2), Cyclin A2 (CCNA2), Cyclin-dependent kinase 1 (CDK1), E2F1, cell division cycle 6 (CDC6), and CDC7 were downregulated in DDH. Conclusion. DDH is associated with the loss of collagen fibres and fibroblasts, which may cause loose joint capsule formation. However, the degree of differentiation of fibroblasts to myofibroblasts needs further study. Cite this article: Bone Joint Res 2021;10(9):558–570