Purpose Elbow flexion is a key indicator of functional recovery in obstetric brachial plexus palsy (OBPP). However, lack of flexion could be a result of an entrapped musculocutaneous nerve during the healing period. The purpose of this study was to investigate the possible compression of the musculocutaneous nerve and outcomes of decompression. Methods The study included 11 children aged with a mean age of 10.9 +/- 2.7 months (range, 8-16 months) with Narakas 2 involvement OBPP, who had insufficient elbow flexion but had satisfactory shoulder abduction. Prior to surgery, magnetic resonance imaging (MRI) was performed to identify the entrapment. The children were evaluated pre-operatively and at 3 and 12 months postoperatively using the Active Movement Scale and Faradic Excitability Test. The musculocutaneous nerve was explored and decompressed in all the children. Regular physiotherapy and a home exercise programme were prescribed after surgery. Results The MRI findings were consistent with the surgical exploration in all the infants. Statistical analyses showed that decompression of the musculoskeletal nerve improved active movement scale scores on elbow flexion and faradic excitability test values of biceps brachii within 3 months after surgery. Conclusion Children with delayed elbow flexion and satisfactory shoulder abduction may have an entrapped musculocutaneous nerve in the proximal arm and decompression of the nerve improves elbow function.