Recent clinical and basic science work has increased our knowledge of shoulder instability. Valuable information has been gained by cutting studies of the capsuloligamentous complex to clarify the biomechanics of instability. It is now clear that a significant overlap exists in the concepts of instability and impingement relating to anterior shoulder pain. These concepts have added new importance to organization and standardization when classifying and diagnosing shoulder instability. This manuscript presents an algorithmic approach to classification of shoulder girdle complaints that may be related to instability. This classification system is designed around the direction, degree, chronology, cause, and volition of instability. With accurate and detailed analysis of the historical presentation, most shoulder instability complaints can be classified using this approach. The physical examination also should proceed in an orderly fashion, including general impression of the musculoskeletal system, inspection, palpation, and range of motion of both the uninvolved and involved shoulder, neurologic examination, rotator cuff evaluation, and stability assessment. Stability assessment includes glenohumeral translation examination with apprehension and provocative testing. Management techniques are predicted on an accurate diagnosis. With a thorough and organized examination, the correct diagnosis can be achieved.