Controversy exists regarding the origin of femoral torsion, and specific treatment rules regarding the optimal position of femoral osteotomy in patients with recurrent patellar subluxation and excessive femoral torsion are scarce. To establish a novel classification system for such patients, and to compare clinical and radiological outcomes after distal derotational femoral osteotomy (DDFO) between femoral torsion at proximal (neck and shaft) and distal levels. Between January 2014 and June 2019, patients who underwent DDFO were retrospectively reviewed. The segmental torsion analysis was performed to establish a novel classification system, and classify included patients into two groups: 35 patients in proximal torsion group and 38 patients in distal torsion group. These patients were followed-up for at least 3years. Clinical evaluations included functional outcomes, physical examinations, quality of life, activity level, satisfaction, and complications. Radiological outcomes included patellofemoral osteoarthritis, congruence, and alignment. Type I was defined as the proximal torsion. Type II was defined as the distal torsion. Proximal torsion group had lower postoperative femoral torsion (12.6 ± 2.6° vs. 14.8 ± 3.6°; P = .004) and higher surgical correction angle (21.6 ± 5.0° vs. 19.1 ± 3.0°; P = .009). All clinical and radiological outcomes improved significantly in both groups, but proximal torsion group had significantly higher quality of life (EQ-5D-5L: 0.96 ± 0.06 vs. 0.91 ± 0.07; P = .003. 92.0 ± 6.0 vs. 88.7 ± 5.8; P = .021) and Tegner activity score (5.2 ± 1.5 vs. 4.5 ± 1.4; P = .040), and fewer patellofemoral osteoarthritis (8.6% vs. 26.3%; P = .048). Two patients in the distal torsion group had subjective patellar instability. The percentage of patients with anterior knee pain was higher in the distal torsion group. A novel classification system for patients with recurrent patellar subluxation and excessive femoral torsion based on segmental femoral torsion analysis was established. DDFO was more appropriate for patients with proximal torsion, yielding higher surgical correction angle, and better clinical and radiological outcomes. Cohort study; Level of evidence, 3.