Background: Arthroscopic hip surgery has risen 18-fold in the past decade; however, there is a dearth of clinical trials comparing surgery with nonoperative management. Purpose: To determine the comparative effectiveness of surgery and physical therapy for femoroacetabular impingement syndrome. Study Design: Randomized controlled trial; Level of evidence, 1. Methods: Patients were recruited from a large military hospital after referral to the orthopaedic surgery clinic and were eligible for surgery. Of 104 eligible patients, 80 elected to participate, and the majority were active-duty service members (91.3%). No patients withdrew because of adverse events. The authors randomly selected patients to undergo either arthroscopic hip surgery (surgery group) or physical therapy (rehabilitation group). Patients in the rehabilitation group began a 12-session supervised clinic program within 3 weeks, and patients in the surgery group were scheduled for the next available surgery at a mean of 4 months after enrollment. Patient-reported outcomes of pain, disability, and perception of improvement over a 2-year period were collected. The primary outcome was the Hip Outcome Score (HOS; range, 0-100 [lower scores indicating greater disability]; 2 subscales: activities of daily living and sport). Secondary measures included the International Hip Outcome Tool (iHOT-33), Global Rating of Change (GRC), and return to work at 2 years. The primary analysis was on patients within their original randomization group. Results: Statistically significant improvements were seen in both groups on the HOS and iHOT-33, but the mean difference was not significant between the groups at 2 years (HOS activities of daily living, 3.8 [95% CI, –6.0 to 13.6]; HOS sport, 1.8 [95% CI, –11.2 to 14.7]; iHOT-33, 6.3 [95% CI, –6.1 to 18.7]). The median GRC across all patients was that they “felt about the same” (GRC = 0). Two patients assigned to the surgery group did not undergo surgery, and 28 patients in the rehabilitation group ended up undergoing surgery. A sensitivity analysis of “actual surgery” to “no surgery” did not change the outcome. Twenty (33.3%) patients who underwent surgery and 4 (33.3%) who did not undergo surgery were medically separated from military service at 2 years. Conclusion: There was no significant difference between the groups at 2 years. Most patients perceived little to no change in status at 2 years, and one-third of military patients were not medically fit for duty at 2 years. Limitations include a single hospital, a single surgeon, and a high rate of crossover. Registration: NCT01993615 ( ClinicalTrials.gov identifier)