Clinical and cadaveric studies were done to investigate the role of a degenerative fringe of the radiocapitellar complex subluxating in the radiocapitellar joint in patients with lateral epicondylitis. In the clinical study, arthroscopic resection of this capsular complex was done. Thirty patients with recalcitrant symptoms of lateral epicondylitis for a minimum of 9 months had surgery. In all patients at arthroscopy, a collar-like band of radiocapitellar capsular complex was found to impinge on the radial head and subluxate into the radiocapitellar joint with manipulation under direct vision. Histologic analyses of the resected tissue showed hyaline degeneration and fibrosis. There were no complications in this series. Twenty-eight patients had complete relief of symptoms by this procedure within 2 weeks of surgery. The average time until return to work was 7 days. Elbow arthroscopy was done in 34 cadaveric elbows to examine the relationship of the annular ligament, the lateral joint capsule, and the radial head. A degenerative capsular fold impinging on the radial head was seen in 15 elbows. A classification system, based on the relationship of the capsular fold to the radial head is described. In Type 1 (19 elbows), the radial head is completely exposed. In Type 2 (six elbows), there is partial coverage of the radial head by the capsuloligamentous complex without interposition into the joint in any position. In Type 3 elbows (six elbows), there is subluxation of the capsular edge into the joint, whereas in Type 4 elbows (three elbows), the radial head is completely obscured throughout the range of motion. The lesion was equally prevalent in men and women. The arthroscopic findings at the time of surgery in the clinical group were the same as the Grade 2 and Grade 3 changes that were seen in cadaveric specimens.