OBJECTIVE The authors studied 57,103 randomly selected Medicare beneficiaries who underwent extracapsular cataract extraction in 1986 or 1987 to determine the possible association between performance of neodymium (Nd):YAG laser capsulotomy and the risk of subsequent retinal break or detachment. METHODS Cases of cataract surgery were identified from Medicare claims submitted in 1986 and 1987 and were followed through the end of 1988. Episodes of cataract surgery, posterior capsulotomy, and retinal complications were ascertained based on procedure and diagnosis codes listed in physician bills and hospital discharge records. Lifetable and Cox's proportional hazards models were used to analyze the risk of retinal detachment or break in patients undergoing and not undergoing capsulotomy during the period of observation. RESULTS Of the 57,103 persons identified as having undergone extracapsular cataract extraction in 1986 or 1987, 13,709 subsequently underwent Nd:YAG laser capsulotomy between 1986 and 1988. A total of 337 persons had aphakic or pseudophakic retinal detachments between 1986 and 1988 and an additional 194 underwent repair of a retinal break. Proportional hazards modeling shows a 3.9-fold increase in the risk of retinal break or detachment among those who underwent capsulotomy (95% confidence interval: 2.89 to 5.25). Younger patient age, male sex, and white race also were associated with increased risk of retinal complications after extracapsular cataract extraction. CONCLUSIONS The authors conclude that there is a statistically significant increase in the risk of retinal detachment or break in those patients who undergo capsulotomy after cataract extraction. Therefore, capsulotomy should be deferred until the patient's impairment caused by capsular opacification warrants the increased risk of retinal complications associated with performance of capsulotomy.