This paper presents the anatomical and biomechanical aspects of chronic instability of the craniocervical junction (CCJ) with a discussion on clinical diagnostics based on mobility tests and provocative tests related to ligamentous system injuries, as well as radiological criteria for CCJ instability. In addition to the structural instability of the CCJ, the hypothesis of its functional form resulting from cervical proprioceptive system (CPS) damage is discussed. Clinical and neurophysiological studies have shown that functional disorders or organic changes in the CPS cause symptoms similar to those of vestibular system diseases: dizziness, nystagmus, and balance disorders. The underlying cause of the functional form of CCJ instability may be the increased activity of mechanoreceptors, leading to "informational noise" which causes vestibular system disorientation. Due to the disharmony of mutual stimulation and the inhibition of impulses between the centers controlling eye movements, the cerebellum, spinal motoneurons, and the vestibular system, inadequate vestibulospinal and vestibulo-ocular reactions occur, manifesting as postural instability, dizziness, and nystagmus. The hyperactivity of craniocervical mechanoreceptors also leads to disturbances in the reflex regulation of postural muscle tone, manifesting as "general instability". Understanding this form of CCJ instability as a distinct clinical entity is important both diagnostically and therapeutically as it requires different management strategies compared to true instability. Chronic CCJ instability significantly impacts the quality of life (QOL) of affected patients, contributing to chronic pain, psychological distress, and functional impairments. Addressing both structural and functional instability is essential for improving patient outcomes and enhancing their overall QOL.