Glenohumeral joint instability is a common pathology observed in the orthopedic and sports medicine settings. Overhead athletes often exhibit a certain degree of acquired laxity that can lead to various pathologies. Unfavorable results often observed with traditional open procedures to correct instability in the overhead athlete have led to the development of arthroscopic thermal-assisted capsular shrinkage (TACS). TACS is not commonly used as an isolated procedure in overhead athletes; various procedures are often performed concomitantly. The overall outcome greatly depends on a postoperative rehabilitation program that must be assessed and adjusted frequently based on several factors. Knowledge of the basic science of TACS as well as emphasis on dynamic stabilization, proprioception, and neuromuscular control are vital to the rehabilitation program for overhead athletes. The purpose of this paper is to discuss the basic science and clinical application of thermal-assisted capsular shrinkage of the glenohumeral joint as well as the postoperative rehabilitation for the overhead athlete and the patient with congenital laxity and related multidirectional instability.