Non-traumatic shoulder pain in the overhead athlete is a diagnostic challenge. In the last decade shoulder arthroscopy and magnetic resonance imaging (MRI) techniques have extended our knowledge. Previously unknown pathologic changes in the glenohumeral joint have been demonstrated and it is recognized that impingement symptoms and instability are often related. Shoulder dysfunction in overhead athletes may be caused by shoulder instability. However, a possible instability in the shoulder is often "silent" and difficult to demonstrate by ordinary tests and has therefore by some been termed "functional instability". It is now thought that functional instability in the shoulder may lead to a vicious cycle involving microtraumata and attenuation of the capsular complex, and may eventually lead to shoulder pain. Changes in shoulder proprioception, measured by testing kinaesthetic sense and position sense, can be related to different pathologic changes in the shoulder, and sensory motor control may be an important factor for functional stability in the shoulder. MRI and arthroscopical findings in athletes with shoulder pain are changes in the glenoid labrum, the humeral head, the rotator cuff, biceps tendon and the capsular complex. However, these findings often present other clinical entities than impingement and are not always associated with instability. Clinically, there are tests that can objectively distinguish some of the pathological findings. However, we need more exact methods to further improve our clinical diagnoses of the painful shoulder. One of the keys could be an extended knowledge about the pathophysiology behind functional instability. This review focuses on an improved terminology in impingement based on the current knowledge of impingement and instability in the shoulder.