Ring-shaped lateral meniscus is a rare clinical entity that is usually asymptomatic. Moreover, diagnosis is always based on arthroscopic exploration of lateral meniscus. MRI has not been proven useful so far because the inner portion of the ring-shaped lateral meniscus is usually misinterpreted as a bucket-handle tear. The authors report a case of a 16-year-old girl with ring-shaped lateral meniscus in combination with a meniscal cyst. MRI demonstrated a cyst arising from lateral meniscus and meniscal tissue into the inner portion of the lateral compartment mimicking displaced meniscal fragment. Bucket-handle tears have not been reported to cause or accompany meniscal cysts. As a result the diagnosis of a ring-shaped lateral meniscus along with meniscal cyst was assumed based on MRI and confirmed during arthroscopy. The patient was treated with arthroscopic partial lateral meniscectomy and intra-articular cyst debridement.