The arthroscope can play an important diagnostic role in the arthritis patient. The major utility of this procedure is in the patient with unexplained knee pain and swelling or in the patient with an established knee arthritis whose symptoms are disproportionate to radiographic findings or refractory to standard-course medical therapy. Technologic advances have led to the production of smaller instruments, making office-based diagnostic arthroscopy a practical, cost-effective alternative in the evaluation of these patients, and supporting the clinical argument for it as a procedure distinct from conventional arthroscopy. Separate clinical scenarios further subdivide the indications for diagnostic arthroscopy and define potential intra-articular abnormalities that, if found, can justify alterations in or additions to therapeutic plans, including arthroscopically directed tissue resection and modification or application of tissue-modifying agents. The research capabilities of needle arthroscopy are only just beginning to be realized; opportunities now exist for design of prospective clinical trials in which patients are randomized based on intra-articular abnormalities, and for the serial assessment of specific treatment effects on gross, microscopic, and molecular features of target tissue as identified by the arthroscope.