Labral lesions are a common indication for hip arthroscopy (HA). We report a case of a 49-year-old woman who underwent HA for a long ventrolateral labral tear and exostosis of the lateral acetabular rim. She also presented with moderate hip dysplasia. The acetabular labrum was resected from the ventral to the lateral aspect; in addition, the exostosis of the lateral acetabular rim was removed. Three months later, the hip joint was unstable and subluxated. According to our literature search, this complication of HA has not yet been reported. This should admonish us to be cautious in performing resection of the labrum and acetabular exostosis especially in patients with hip dysplasia. Because of reduced bony containment of dysplastic hips, the acetabular labrum has a more stabilizing function in dysplastic joints. Therefore, in dysplastic hip joints with extensive labral tears or degeneration, resection of the labrum and acetabular exostosis should be performed carefully and to the most minimal extent.