Purpose The aims of this study were to (1) investigate the effect of hydrodilatation in frozen shoulder patients on objective indices of shoulder functionality and subjective outcomes of pain, mobility, kinesiophobia, depression, and anxiety, and (2) progress knowledge about the reciprocal temporal relationship between psychological parameters at baseline and objective and subjective outcomes at 3-month follow-up. Methods We evaluated the clinical and psychological status of 72 patients with a frozen shoulder before and after hydrodilatation, using the Constant Murley score, the Visual Analogue score, the Tampa Scale for Kinesiophobia, the Hospital Anxiety and Depression Scale, and the Shoulder Pain And Disability Index. Results We noted a significant improvement in functionality, pain and disability (p < .001). Depression and anxiety improved significantly (p < .001) between baseline and 3-month follow-up. Prospective analyses demonstrated that psychological factors are more likely to predict outcomes of hydrodilatation than vice versa. Conclusion Hydrodilatation followed by physiotherapy is an excellent way to treat patients with recalcitrant frozen shoulder, resulting in a continuous improvement of ROM and pain. Physiotherapists and physicians should be aware that psychological factors might have an impact on the treatment outcome.