Nine patients with mechanical or osteoarthritic knee pain present for more than 6 weeks were evaluated by clinical examination, needle arthroscopy, and standard arthroscopy. Each knee was assessed for patellofemoral cartilage disruption, cartilage abnormalities in the tibiofemoral joints, meniscal tears, and synovitis. Needle arthroscopy was performed immediately before standard arthroscopy in the operating room under local anesthesia. Six of the nine patients had magnetic resonance imaging (MRI) scans before the arthroscopic procedures. The clinical examination was 100% sensitive for the detection of patellofemoral disease, 62% sensitive for medial meniscal tears, and 14% sensitive for lateral meniscal tears. Visualization of the femoral-tibial joint was significantly better with standard arthroscopy than with needle arthroscopy (p = 0.002). Percent visualization with the needle arthroscope was higher for the patellofemoral and the medical tibiofemoral cartilage compared to the lateral tibiofemoral cartilage and menisci (p < 0.05). The needle arthroscope and MRI scan were equivalent to the standard arthroscope in the detection of patellofemoral cartilage disruption of any depth and in the detection of meniscal tears. However, the standard arthroscope was better in detecting cartilage abnormalities in the medial and lateral joint spaces (p < 0.05 and p < 0.01, respectively). The costs for diagnostic standard arthroscopy, needle arthroscopy, and MRI of the knee in an academic center are $3900, $1650, and $900, respectively. These data suggest that the majority of reversible causes of knee pain are diagnosed by physical examination. Therefore, after a complete history and physical examination, if the physician thinks that the patient has an internal derangement of the knee and that surgical intervention is needed, we suggest that the patient go directly to standard arthroscopy, which offers both confirmation and therapy. The MRI scan or needle arthroscopy should be considered only if, after a history and physical examination, the diagnosis of the knee pain is unclear.