There is little published information on the health impact of frozen shoulder. The purpose of this study was to assess the functional and health-related quality of life outcomes following arthroscopic capsular release (ACR) for contracture of the shoulder. Between January 2010 and January 2012 all patients who had failed non-operative treatment including anti-inflammatory medication, physiotherapy and glenohumeral joint injections for contracture of the shoulder and who subsequently underwent an ACR were enrolled in the study. A total of 100 patients were eligible; 68 underwent ACR alone and 32 had ACR with a subacromial decompression (ASD). ACR resulted in a highly significant improvement in the range of movement and functional outcome, as measured by the Oxford shoulder score and EuroQol EQ-5D index. The mean cost of a quality-adjusted life year (QALY) for an ACR and ACR with an ASD was £2563 and £3189, respectively. . ACR is thus a cost-effective procedure that can restore relatively normal function and health-related quality of life in most patients with a contracture of the shoulder within six months after surgery; and the beneficial effects are not related to the duration of the presenting symptoms. Cite this article: Bone Joint J 2013;95-B:942–6