We have attempted to define the indications for and limitations of varus derotation osteotomy in the treatment of persistent dysplasia in congenital dislocation of the hip. We studied the cases of thirty-four patients (forty-four hips) who were divided into three groups according to age at operation, and evaluated the influence of femoral remodeling, age, acetabular response, instability, and pre-existing avascular necrosis with respect to the final results. The length of follow-up ranged from five to twenty-two years. Rapid return to a valgus femoral neck-shaft angle by remodeling was not a cause of failure in any age group. There were consistently good results in the patients who were less than four years old at the time of operation. Acetabular correction by remodeling occurred through the age of eight years, but four of thirteen hips in patients who were between the ages of four and eight showed persistent dysplasia despite the operative procedure. The results were less predictable as the patients approached the age of eight years. There was no benefit from isolated femoral osteotomy in ten of eleven hips in patients who were older than eight. Pre-existing avascular necrosis appeared to compromise the results of the procedure in all age groups.