Twenty-three postoperative peroneal-nerve palsies in twenty-two patients were documented in the records of 2626 consecutive knee arthroplasties that were performed at The Hospital for Special Surgery from 1974 through 1980. This is an incidence of 0.87 per cent. The preoperative knee deformities included fourteen flexion contractures, eleven valgus deformities, and five biplane deformities. In five patients a peroneal palsy developed despite a peroneal-nerve release at the time of arthroplasty. Only two patients, who initially had only a motor loss, had a complete clinical recovery. Follow-up ranged from six months to seven years (average 3.1 years). Sensory deficits, initially noted in eighteen patients, had not fully resolved in any patient at the time of writing. Although motor deficits were initially noted in all patients, only 28.6 per cent of them fully resolved. The possible causes of the nerve palsy appeared to be direct traction on the nerve, traction on the surrounding tissues resulting in vascular compromise to the nerve, direct pressure on the nerve from the postoperative dressing, or a combination of these factors. When the palsy is discovered, the suggested treatment is a change to a looser dressing and flexion of the knee. The value of surgical exploration of the nerve in the immediate postoperative period is not known.