To characterize the physiologic and neuroanatomical features and functional outcome of proximal dominant paresis of the upper extremity (UE) in poststroke patients. The authors studied 34 hemiparetic patients after the first subcortical stroke (mean age 65 years; males/females = 21/13; mean 45 days after stroke; right/left hemiparesis = 20/14). They were divided into proximal and distal paresis groups according to the distribution of UE paresis. Transcranial magnetic stimulation (TMS) was used to assess residual function of the descending pathways to the UE muscles. The location and size of lesions were assessed by MRI. The lesion density maps revealed damages in the posterior putamen, posterior limb of the internal capsule, and posterior half of the corona radiata in the distal group (n = 19), whereas lesions in the proximal group (n = 15) uniformly encompassed the middle part of the corona radiata, usually sparing the posterior half of the posterior limb of the internal capsule. TMS indicated that the descending pathways to proximal muscles were disrupted in patients with proximal UE paresis, whereas innervation to distal muscles was spared. Functional outcome of the affected UE after inpatient rehabilitation was better in the proximal group. It depended on the initial severity of UE paresis, but not on TMS findings, age, or the size of the lesions. Although the distribution of upper extremity (UE) paresis was associated with distinct MRI and transcranial magnetic stimulation (TMS) findings, the clinical examination of UE paresis was more sensitive than MRI or TMS findings in predicting functional outcome of the paretic UE.