BACKGROUND Studies concerning the relationship between distal radius fracture malunion and a persistent arm-related disability have produced conflicting results. QUESTIONS/PURPOSES We investigated (1) how arm-related disability changes during the first 2 years after a fracture and (2) whether fracture malunion causes persistent disability. METHODS One hundred twenty-three patients with distal radius fractures, treated with closed reduction and casts or external or percutaneous pin fixations, completed the DASH questionnaire at baseline, 3 months, 6 months, 1 year, and 2 years after fracture. Radiographic measurements were made at 1 year. Using a definition of malunion as ulnar variance of 1 mm or more and dorsal tilt greater than 10°, the patients were classified into three groups: no malunion (n = 35), malunion involving either ulnar variance or dorsal tilt (n = 65), and malunion involving ulnar variance and dorsal tilt (n = 23). The changes in the DASH scores with time (baseline to 2 years), in relation to malunion, were analyzed using generalized estimating equations adjusted for age, sex, fracture type (extraarticular or intraarticular), and treatment method. RESULTS The mean change in DASH scores from baseline to 2 years was worse for patients with malunions involving ulnar variance and dorsal tilt than for patients with no malunions (mean difference, 13; 95% CI, 1.4-25) and for patients with malunions involving either ulnar variance or dorsal tilt (mean difference, 13; 95% CI, 2.2-24). CONCLUSION After distal radius fracture, arm-related disabilities are more likely to persist at least 2 years in patients with fractures that healed with shortening and dorsal angulation than in patients with only shortening or dorsal angulation or without malunion.