Posterior shoulder instability (PSI) is relatively rare compared to anterior instability. Presentation also tends to be vague with pain more frequently reported than frank instability. Hence, it is thought to be widely under recognized. Rather than a single homogenous condition, PSI exists on a spectrum between acute traumatic posterior dislocation, recurrent microtrauma subluxation, and atraumatic instability. Diagnosis relies on a high index of suspicion, combined with careful clinical examination and the use of special tests for PSI. Advanced imaging is useful in both diagnosis and surgical planning. MRI can reveal the presence of posterior labral lesions, which are associated with paralabral cysts. CT is useful in assessing the presence and size of reverse Hill-Sachs lesion, posterior glenoid bone loss, and glenoid version. A course of conservative treatment is recommended for most patients on initial presentation, except in cases of significant bone loss on initial radiographs or acute trauma in young active patients due to high rates of treatment failure. Conservative treatment is focused on strengthening of the posterior dynamic stabilizers and the external rotators to strengthen the force couple and joint stability. When selecting a surgical strategy, isolated posterior capsulolabral procedures may be insufficient when critical bone loss exists. In the humeral head, defect greater than 20% requires filling of the defect either with bone graft or subscapularis tendon, while defect greater than 40% usually requires arthroplasty. In the glenoid, posterior bone loss more than 15% necessitates a posterior bone block. In the absence of bone loss, arthroscopic posterior capsulolabral repair has shown good outcome. However, outcomes may be inferior in overhead throwing athletes.