This study investigated 11 patients with localized pigmented villonodular synovitis of the knee that was diagnosed and treated by arthroscopic technique. There were six male and five female patients between the ages of 15 and 59 years (mean, 34.6 years). Seven patients reported extension limitation without joint line tenderness. Four of the 11 patients had a history of trauma before the onset of knee symptoms. All patients were treated by arthroscopic resection with partial synovectomy. The most common involved site was the anteromedial synovium near the anterior horn of the medial meniscus (five patients). The remaining cases were located in the anterior fat pad (two patients), suprapatellar pouch, posteromedial compartment, medial gutter, and the anterior horn of the lateral meniscus. Nine patients had one mass, and the remaining patients each had two or three masses. There was no evidence of recurrence at followup for an average of 29.9 months (range, 24-48 months). Arthroscopy is effective in the diagnosis of localized pigmented villonodular synovitis with minimal morbidity, and complete arthroscopic excision can be considered the definitive treatment for localized pigmented villonodular synovitis.