Introduction:The failure rate of Pavlik harness treatment for developmental dysplasia of the hip (DDH) has been reported as high as 55%. The purpose of this study is to investigate the effect of an inverted acetabular labrum on outcomes of Pavlik harness treatment for DDH. Methods: A retrospective review was conducted on DDH patients at a tertiary care pediatric hospital from 2004 to 2016. DDH patients that underwent index treatment with Pavlik harness and had minimum 12 months follow-up were included. Medical charts were reviewed for demographics, treatment, and outcomes. Outcomes were compared between patients with an inverted labrum versus those without an inverted labrum. Results: A total of 156 patients with 229 dysplastic hips were included. The mean age at initiation of Pavlik harness treatment was 1.9 ± 1.4 months and mean follow-up was 37.7 ± 23.0 months. Bilateral DDH was diagnosed in 46% (73/156) of patients. In all, 37% (75/229) of hips failed Pavlik harness index treatment. Second-line treatment was rigid hip abduction bracing in 91% (68/75) of hips, closed reduction in 5% (4/75) of hips, and open reduction in 4% (3/75) of hips. An inverted labrum was present in 10% (22/229) of all hips. The incidence of Pavlik harness treatment failure was 91% (20/22) in the inverted labrum group compared with 27% (55/207) in the control group (P < 0.001). Closed or open reduction was required in 86% (15/22) of the inverted labrum group compared with 3% (7/207) of hips in the control group (P < 0.001). The incidence of avascular necrosis was 18% (4/22) in hips with an inverted labrum compared with 0.4% (1/207) in the control group (P < 0.001). Conclusions: In children with DDH undergoing index treatment in a Pavlik harness, the presence of an inverted acetabular labrum is strongly predictive of treatment failure. Dysplastic hips with an inverted labrum also have a significantly higher risk of requiring closed or open reduction and developing avascular necrosis compared with those without an inverted labrum. Level of Evidence: Level III.