Retained haemothorax is a common sequela of traumatic haemothorax and refers to blood that cannot be drained from the pleural cavity. We report a case of trapped lung secondary to retained haemothorax in a patient who sustained a penetrating chest injury. Initial chest computed tomography (CT) showed a large haemothorax that was managed with an intercostal drain insertion (ICD). Repeat chest CT and thoracic ultrasonography performed after ICD removal showed an organized pleural space resembling haematoma. ICD was reinserted with administration of intrapleural fibrinolytic therapy (IPFT). Subsequent chest CT showed the development of a pleural rind and trapped lung. A second ICD was inserted, and further IPFT were administered together with aggressive negative pressure suction. Haemoglobin remained stable. The patient made a full recovery and imaging performed two weeks later showed minor blunting of the costophrenic angle. This case highlights the feasibility and safety of IPFT in the management of trapped lung associated with traumatic retained haemothorax as an alternative to surgery.