BACKGROUND Many patients with displaced intra-articular calcaneal fractures require subtalar arthrodesis for the treatment of posttraumatic arthritis. We hypothesized that patients who underwent initial operative treatment would have better functional outcomes as compared with those who underwent initial nonoperative treatment before undergoing a subtalar arthrodesis. METHODS A consecutive series of sixty-nine patients with seventy-five displaced intra-articular calcaneal fractures underwent subtalar arthrodesis for the treatment of painful posttraumatic subtalar arthritis. Group A comprised thirty-four patients (thirty-six fractures) who initially were managed with open reduction and internal fixation and subsequently underwent in situ subtalar fusion at an average of 22.6 months later. Group B comprised thirty-five patients (thirty-nine fractures) who initially were managed nonoperatively and had development of a symptomatic painful malunion and subsequently underwent a subtalar distraction arthrodesis. The two groups were similar with respect to age, sex, injury mechanism, and smoking status. All complications were noted and functional outcomes were assessed at a minimum of forty-eight months after fusion. RESULTS All sixty-nine patients were available for follow-up. The average duration of follow-up was 62.5 months for Group A and 63.5 months for Group B. There were three nonunions of the subtalar fusion requiring revision in each group. Group A had fewer postoperative wound complications and had significantly higher Maryland Foot Scores (90.8 compared with 79.1; p < 0.0001) and American Orthopaedic Foot and Ankle Society ankle-hindfoot scores (87.1 compared with 73.8; p < 0.0001) than did Group B. CONCLUSIONS In our study population, better functional outcomes and fewer wound complications were associated with subtalar fusion for the treatment of symptomatic posttraumatic subtalar arthritis after initial open reduction and internal fixation of a displaced intra-articular calcaneal fracture as compared with subtalar arthrodesis for the treatment of symptomatic posttraumatic subtalar arthritis secondary to calcaneal malunion following initial nonoperative treatment. Initial open reduction and internal fixation restores calcaneal shape, alignment, and height, which facilitates the fusion procedure and establishes an opportunity to create a better long-term functional result. We recommend open reduction and internal fixation for the treatment of displaced intra-articular calcaneal fractures when appropriately indicated.