Juxtafacet cysts of the atlantooccipital joint that present with isolated hypoglossal nerve palsy are rare and may mimic more common pathological entities. The authors report on the third such case in the literature and discuss the differential diagnosis, imaging hallmarks, preoperative recognition, and surgical management of this lesion, and provide a review of the literature. The authors discuss their experience with the treatment of a 67-year-old woman who presented with an isolated hypoglossal nerve palsy caused by a nonenhancing cystic septated lesion abutting the lateral medulla just medial to the left hypoglossal canal. The lesion was presumed to be a necrotic hypoglossal schwannoma or epidermoid tumor. Intradural surgical exploration failed to demonstrate an intradural lesion, but confirmed the presence of an extradural mass caudal to the hypoglossal nerve. Extradural exploration revealed a synovial cyst of the atlantooccipital joint, which was then resected. Postoperatively, the patient developed worsening dysphagia and hoarseness. Failure to recognize this rare entity preoperatively resulted in unnecessary intradural exploration and cranial nerve morbidity. In retrospect, the preoperative diagnosis of this lesion was suggested by lack of central enhancement, absence of dumbbell formation and the presence of erosive synovial changes. Regardless, the extreme rarity of this lesion at this location will always make its recognition challenging.