Background: Recent studies have reported high rates of recurrence of shoulder instability in patients with glenoid bone defects greater than 20% after capsulolabral reconstruction. The purpose of the present study was to evaluate the failure rate of arthroscopic capsulolabral reconstruction for the treatment of anterior instability in the presence of glenoid bone deficits >20%. Methods: Retrospective analyses were conducted among cases with anterior shoulder instability and glenoid bone defects of >20% that were treated by arthroscopic capsulolabral reconstruction with a minimum 2-year follow-up (30 cases). We included the following variables: age, bone defect size, instability severity index score (ISIS), on-/off-track assessment, incidence recurrent instability, and return to sports. Results: The mean glenoid bone defect size was 25.8% ± 4.2% (range, 20.4%–37.2%), and 18 cases (60%) had defects of >25%. Bony Bankart lesions were identified in 11 cases (36.7%). Eleven cases (36.7%) had ISIS scores >6 points and 21 cases (70%) had off-track lesions. No cases of recurrent instability were identified over a mean follow-up of 39.9 months (range, 24–86 months), but a sense of subluxation was reported by three patients. Return to sports at the preinjury level was possible in 24 cases (80%), and the average satisfaction rating was 92%. Conclusions Arthroscopic soft tissue reconstruction was successful for treating anterior shoulder instability among patients with glenoid bone defects >20%, even enabling return to sports. Future studies should focus on determining the range of bone defect sizes that can be successfully managed by soft tissue repair.