Background: Guided physiotherapy and surgical arthrolysis are effective in most patients with knee extension deficit. However, in refractory cases, posterior knee capsulotomy may be needed. Purpose: To assess extension restoration, pain reduction, and functional improvement after arthroscopic complete posterior knee capsulotomy in patients with extension deficit refractory to guided physiotherapy and surgical arthrolysis. Study Design: Case series; Level of evidence, 4. Methods: Included were patients with symptomatic asymmetric extension deficit >3° refractory to at least 6 months of guided physiotherapy and initial arthrolysis (15 patients with 12-month follow-up and 8 patients with 24-month follow-up). The mean duration of extension deficit was 24.6 months. An arthroscopic complete posterior knee capsulotomy was performed with transection of the posteromedial, posterolateral and central capsule, and the posterior septum. The primary outcome measure was knee extension, with hyperextension denoted as negative knee extension values. Secondary outcome measures included visual analog scale (VAS) for pain during maximum effort and exercise, International Knee Documentation Committee (IKDC) score, and Knee injury and Osteoarthritis Outcome Score (KOOS). Results: The mean patient age was 40.0 years (range, 26-70 years); 6 out of 15 patients had developed knee contracture after isolated anterior cruciate ligament reconstruction. The mean knee extension deficit decreased from 16.9° (range, 7° to 45°) preoperatively to -0.2° (range, -5° to 5°) at 12-month follow-up (P = .003) and to -0.3° (range, -5° to 5°) at 24-month follow-up (P = .035). The mean VAS pain score decreased from 3.5 (range, 1-6) preoperatively to 1.1 (range, 0-2) at 12-month follow-up (P = .004) and to 1.5 (range, 0-4) at 24-month follow-up (P = .005). The mean IKDC increased from 37.9 (range, 21-62) preoperatively to 63.9 (range, 46-87) at 12-month follow-up (P < .001) and to 60.9 (range, 39-80) at 24-month follow-up (P = .003). The mean KOOS increased from 45.0 (range, 30-62) preoperatively to 75.3 (range, 49-94) at 12-month follow-up (P < .001) and to 72.3 (range, 49-92) at 24-month follow-up (P = .003). There were no significant differences between 12- and 24-month follow-up in extension deficit or functional outcomes. One patient had a midcalf subcutaneous hematoma 5 weeks postoperatively, requiring evacuation. Conclusion: Arthroscopic complete posterior knee capsulotomy was able to restore knee extension, reduce pain, and improve function, with 12-month follow-up results sustained at 24-month follow-up.