We present an arthroscopic technique used to treat traumatic shoulder instability in patients with glenoid bone loss and a large Hill-Sachs lesion. The procedure consists of an arthroscopic capsulotenodesis of the posterior capsule and infraspinatus tendon to fill the Hill-Sachs lesion. With the patient in the lateral decubitus position, a posterior portal is established at the lateral aspect of the convexity of the humeral head that is centered over the lesion. After anterior-inferior and anterior-superior portals have been established, the camera is placed in the anterior-superior portal. The Hill-Sachs lesion is freshened with a bur through the posterior portal. A cannula is inserted in the posterior portal through the deltoid but not through the infraspinatus or capsule, and an anchor is placed in the inferior aspect of the humeral lesion. A penetrating grasper is passed through the tendon and posterior capsule, 1 cm inferior to the initial portal entry site to pull 1 suture limb. A second anchor is placed superiorly, and 1 suture limb is similarly passed. The inferior suture is tied first with the knots remaining extra-articular, pulling the infraspinatus and capsule into the lesion. After completion, the Bankart lesion can then be repaired.