Background: Glenohumeral instability is one of the most frequent and clinically impactful complications following proximal humerus resection and reconstruction with a megaprosthesis, especially in patients treated for bone tumors or complex fractures. Its incidence, risk factors, and influence on functional recovery remain variably reported in the literature. Methods: A systematic review was conducted according to PRISMA guidelines, searching PubMed, Scopus, and Google Scholar up to April 2025. Studies reporting on postoperative instability, dislocation, functional outcomes (MSTS, DASH), and related complications were included. Two independent reviewers performed data extraction and quality assessment. A pooled analysis was performed using random-effects models. Results: A total of 17 studies including 387 patients were analyzed. The pooled incidence of glenohumeral instability was 32%, with a revision surgery rate of 10% due to instability. The most common reconstruction technique was modular megaprosthesis (47%), followed by allograft–prosthesis composites (APCs) and reverse total shoulder arthroplasty (RSA). Functional outcomes were reported in 12 studies using the Musculoskeletal Tumor Society (MSTS) score, with a weighted mean of 22.3 ± 3.8 (74.3% ± 12.7%). Disabilities of the Arm, Shoulder, and Hand (DASH) scores, reported in 3 studies, showed worse outcomes in unstable shoulders (mean 61.4 ± 5.2 vs. 26.6 ± 4.1). Soft tissue reconstruction, particularly involving the rotator cuff and deltoid, significantly influenced postoperative stability and function. Conclusions: Glenohumeral instability after proximal humerus megaprosthesis is a common and disabling complication that adversely affects functional outcomes and revision rates. Optimizing soft tissue management and prosthetic design is essential to improve joint stability and long-term results.