Background Total knee arthroplasty (TKA) is an orthopaedic operation that improves quality of life and reduces pain in patients with disabling arthritis of the knee. One commonly recognized postoperative complication is flexion contracture of the knee. While early physical therapy and range of motion (ROM) exercises have helped improve ROM postoperatively, flexion contractures still remain a significant postoperative complication of TKA. This study evaluated postoperative sleeping position and its effect on terminal knee extension and ROM following primary TKA. We hypothesized that patients who slept in the supine position would achieve earlier knee extension and ROM when compared to those in the lateral recumbent position. Methods A total of 150 consecutive primary total knee arthroplasties (TKAs) were conducted by a single surgeon (JMC). Prospective data collection included assessments of preoperative range of motion (ROM), postoperative ROM, patient-reported outcome measures, and sleeping positions. Functional outcomes and patient-reported measures were compared between pre- and postoperative phases, as well as across different sleeping position groups. Results Postoperative follow up was a mean of 29.6 days. Mean postoperative terminal extension ROM at one month was 2.98 degrees in the supine group versus 6.03 degrees in the lateral group (P < 0.001). Overall, there was significant improvement in patient reported outcome measures (WOMAC, Oxford, and pain) after surgery, but no difference existed between sleeping groups. For knee extension, a two-way ANOVA revealed that there was a statistically significant interaction between the effects of surgery and sleep position (p = 0.0053). Conclusions Our results demonstrate that sleeping position does affect initial postoperative knee terminal extension; however, there is no effect on patient reported outcomes. We found a statistically significant difference in extension when comparing patients in the supine versus lateral group. Patients who slept in the lateral position lacked 6.03 degrees of extension which is greater than the 5 degrees threshold needed for normal gait mechanics. Conversely, those in the supine group only lacked 2.98 degrees of extension, allowing for normal gait mechanics. This study identifies an easy, effective means of increasing patient knee range of motion following TKA.