Objectives: The purpose of the present study was to evaluate clinical and functional outcomes, graft integrity rate and progression of osteoarthritis after superior capsular reconstruction (SCR) at short-term follow-up. Methods: Consecutive patients that underwent SCR using an acellular dermal xeno- or allograft between May 2018 and June 2020 for the treatment of irreparable posterosuperior rotator cuff tears were included. Shoulder function (American Shoulder and Elbow Surgeons [ASES] score), pain (Visual Analog Scale [VAS] for pain) and active shoulder range of motion (ROM) were evaluated preoperatively and after a minimum of 24 months postoperatively. Isometric strength was measured at follow-up and compared to the contralateral side. Magnetic resonance imaging was performed to evaluate graft integrity and osteoarthritis progression (shoulder osteoarthritis severity [SOAS] score). Results: Twenty-two patients that underwent SCR using a xeno- (n = 9) or allograft (n = 13) were evaluated 33.1 ± 7.2 months postoperatively. Four patients in the xenograft group underwent revision surgery due to pain and range of motion limitations and were excluded from further analysis (revision rate: 18.2%). Shoulder function (ASES score: 41.6 ± 18.8 to 72.9 ± 18.6, p < 0.001), pain levels (VAS for pain: 5.8 ± 2.5 to 1.8 ± 2.0, p < 0.001) and active flexion (p < 0.001) as well as abduction ROM (p < 0.001) improved significantly from pre- to postoperatively. Active external rotation ROM did not improve significantly (p = 0.924). Isometric flexion (p < 0.001), abduction (p < 0.001) and external rotation strength (p = 0.015) were significantly lower in the operated shoulder compared to the non-operated shoulder. Ten shoulders demonstrated a graft tear at the glenoid (n = 8, 44.4%) or humerus (n = 2, 11.1%). Graft lysis was observed in seven shoulders (38.9%). The graft was intact in one shoulder (5.6%), which was an allograft. A significant progression of shoulder osteoarthritis was observed at follow-up (SOAS score: 42.4 ± 10.1 to 54.6 ± 8.4, p < 0.001). Conclusions: At short-term follow-up, SCR using an acellular dermal xeno- or allograft resulted in improved shoulder function and pain with limitations in active external rotation ROM and isometric strength. Graft failure rates were high and osteoarthritis progressed significantly. Level of Evidence: Retrospective cohort study, Level III.