PurposeThe study aimed to determine the impact of intraoperative lateral laxity at extension on clinical and functional outcomes 1 year after posterior‐stabilised total knee arthroplasty (PS‐TKA).MethodsIn total, 91 varus‐type osteoarthritic knees that underwent PS‐TKA using the medial preservation gap technique were included. After the femoral trial component placement and patellofemoral joint reduction, the soft‐tissue balance was assessed using an offset‐type tensor with a 40‐lb joint‐distraction force. Patients were divided into the following three groups according to the intraoperative lateral laxity at extension (i.e., varus ligament balance) using the mean ± 1 standard deviation: Groups A, ≤0°; B, 0–4°; and C, >4°. The 2011 Knee Society Score (KSS) and 3‐m timed up‐and‐go test (TUG) time 1‐year postoperatively, and their improvements were compared among the groups.ResultsWhile significant improvements were observed in all subscales of the 2011 KSS and TUG post‐TKA (p < 0.05), the improvement of functional activities and TUG time were significantly lower in Group C than in Group B (p < 0.05). However, no significant differences were observed in symptom improvement, patient satisfaction or patient expectation scores among the groups.ConclusionAn excessive lateral laxity (varus angle) >4° at extension was associated with lower improvement in functional ability 1‐year postoperatively. Therefore, excessive intraoperative lateral laxity should be avoided in PS‐TKA.Level of EvidenceLevel IV.