Purpose To evaluate the effects of the concomitant use of spacer grafts in lateral tarsal strip surgery in patients with facial nerve palsy-related lower-eyelid retraction. Methods Patients who underwent lateral tarsal strip surgery to correct facial nerve palsy-related lower-eyelid retraction were retrospectively reviewed. Postoperative decreases in marginal reflex distance-2 values at 1, 2 and 6 months were measured along with the effects of spacer grafts. Results Forty-five patients (28 males) were included (mean age: 59.56 years). Mean preoperative marginal reflex distance-2 was 6.87 ± 1.34 mm. Twenty patients underwent lateral tarsal strip surgery only (lateral tarsal strip-only); 25 patients underwent lateral tarsal strip surgery using spacer grafts (lateral tarsal strip + graft). Median (interquartile range) follow-up duration was 12.0 (6.0–23.0) months. Retraction was significantly improved and maintained at 1, 2 and 6 months postoperatively in all patients (mean marginal reflex distance-2: 3.78 ± 1.06 mm, 4.30 ± 1.23 mm and 4.72 ± 1.11 mm, respectively). Surgical outcomes were significantly better in the lateral tarsal strip + graft than in the lateral tarsal strip-only group (Δmarginal reflex distance-2: 3.92 vs. 2.05 mm at 1 month, p < 0.001; 3.38 vs. 1.61 mm at 2 months, p = 0.001; 2.88 vs. 1.69 at 6 months, p = 0.042). Subgroup analyses by spacer graft type revealed no significant differences. Conclusion The concomitant use of spacer material in lateral tarsal strip surgery yielded better surgical outcomes than lateral tarsal strip surgery alone. The use of spacer grafts should be considered for correcting severe facial nerve palsy-related lower-eyelid retraction.