BACKGROUND Trauma to knee joint is a significant cause of morbidity in the young, active individuals, especially amongst sports persons, trained soldiers and athletes. The most widely used diagnostic modalities to assess the joint injury are Arthroscopy and MRI. Magnetic Resonance Imaging (MRI) has now been accepted as the best imaging modality for non-invasive evaluation of knee injuries. Aim-This study was undertaken to study the types and incidence of ligament injuries in traumatic knee joint by MR imaging and to compare with Arthroscopy findings. MATERIALS AND METHODS This is a prospective study of 50 cases of internal derangements of the knee, admitted to Government General Hospital, Kurnool between May 2011 and October 2013 who underwent MRI (XGy 0.35 Tesla) and Arthroscopy of the knee. Cases were taken according to exclusion and inclusion criteria, i.e. patients with knee problems more than 6 weeks old with symptoms of locking of the knee, patients with undiagnosed knee pain and knee injury. Only patients between 18-60 years are included in the study. Patients with claustrophobia, metal implants and cardiac pacemakers were excluded from the study. RESULTS MRI shows very good sensitivity in detecting meniscal tears and excellent sensitivity in detecting Anterior Cruciate Ligament (ACL) injuries with a very fewer number of false positives. MRI shows excellent sensitivity and specificity in cases of Posterior Cruciate Ligament (PCL) tears and osseous/Osteochondral Defects (OCD). Our study found that the accuracy of the MRI scans in diagnosing Internal Derangement of Knee (IDK) is in the order of PCL, OCDs, ACL and meniscal lesions. CONCLUSION MRI (magnetic resonance imaging) is an excellent, non-invasive, radiation free imaging modality with multiplanar capabilities and excellent soft tissue delineation. MRI has also very few false negative and false positive results. The negative predictive value of a scan was found to be high for all structures of the knee joint and hence a 'normal' scan can be used to exclude pathology, thus sparing patients from expensive and unnecessary surgery.