A 34-year-old patient presented to our outpatient clinic with the chief complaint of shoulder instability, without any history of trauma. Physical examination revealed a painful apprehension test at 60 degrees, 90 degrees and 120 degrees but no objective sign of shoulder instability or hyperlaxity. MRI-scan showed a cyst over the anterior inferior glenoid rim. Arthroscopic findings were an enlarged capsule, a positive drive-through sign, a SLAP I lesion and a sublabral cyst at the anterior-inferior labrum. Detachment of the anterior labrum could be detected with a probe. The cyst's membrane was resected using a whisker shaver. The capsule and the anterior labrum were refixated with a suture anchor. Following capsular shrinking, there was no further laxity and the drive-through sign was diminished. After three months there was full range of active and passive motion. The patient had no subjective instability sensations. MRI showed no residuum of the cyst. Juxta-articular cysts are a known entity in large joints. There are different types of periarticular cysts. A ganglion cyst of the shoulder associated with glenohumeral instability has, to our knowledge, only been described twice. Our case suggests that mere excision of a juxtaglenoidal ganglion is not sufficient; reconstruction of the labrum must be performed to restore stability of the shoulder.