Brachial plexus birth injury (BPBI), one of the most common nerve injuries in children, often leads to impaired shoulder development, resulting in sustained postural and bone deformity and muscle weakness. Despite the substantial long-term consequences, clinical consensus is lacking for what BPBI treatments are optimal in terms of timing and approach, primarily because BPBI sequelae are complex, involving stunted muscle growth, muscle denervation, and limb disuse that can disrupt glenohumeral joint development. Injury can occur as nerve rupture (postganglionic injury) or nerve avulsion (preganglionic injury), which have distinct musculoskeletal consequences yet are often treated similarly clinically due to their similar initial presentations and the inability of existing methods to distinguish between them. Most of our clinical knowledge about the musculoskeletal detriments in the shoulder comes from studies in nerve rupture patients. Knowledge is generally lacking for the specific effects of injury location on the development and progression of muscle and bone deficits following BPBI. A better understanding of the distinct effects of postganglionic and preganglionic BPBI is important for developing more effective and targeted treatments. More studies are needed to elucidate differences between nerve rupture and nerve avulsion and the particular factors driving glenohumeral deformity development. This paper reviews current knowledge about clinical musculoskeletal deformity development in the shoulder following BPBI, as well as additional insights gleaned from animal and computational models, and identifies key gaps that need to be addressed in future studies to inform better approaches for mitigating and preventing glenohumeral deformity in these patients.