The clinical relevance and nature of calcaneal cysts is controversial. The risk of pathologic fracture is undefined and diagnostic criteria to differentiate between cysts in patients who can be treated nonoperatively and patients who require surgical intervention are not available. To address these questions, 50 calcaneal bone cysts in 47 patients were evaluated. The majority of cysts (40 of 50) were asymptomatic and were treated nonoperatively. Cysts reaching a critical size, defined as 100% intracalcaneal cross section in the coronary plane and at least 30% in the sagittal plane, are at risk for becoming symptomatic and at risk for fracture. Fracture is a significant complication and occurred in four of 47 patients, three of whom were treated by open reduction internal fixation and bone grafting. In addition, six patients with symptomatic critical size cysts without apparent fracture were treated by curettage and subsequent autogenous bone grafting or calcium-phosphate cement filling, and there were no recurrences. We report one of the largest series of cysts in the calcaneus. The results suggest that calcaneal cysts are clinically relevant because of the potential risk of fracture and that size is a significant factor in terms of the treatment of the cyst.