The diagnostic process typically begins with a medical history workup followed by a medical examination by a physician. Imaging tests, such as CT scans and MRIs, help provide a clearer picture. The physician typically looks for fluid (or other bodily substance) filled sacs to appear in the scans, as is shown in the CT scan of a colloid cyst. A primary health care provider will refer an individual to a neurologist or neurosurgeon for further examination. Other diagnostic methods include radiological examinations and macroscopic examinations. After a diagnosis has been made, immunohistochemistry may be used to differentiate between epithelial cysts and arachnoid cysts. These examinations are useful to get a general idea of possible treatment options, but can be unsatisfactory to diagnose CNS cysts. Professionals still do not fully understand how cysts form; however, analyzing the walls of different cyst types, using electron microscopes and light microscopes, has proven to be the best diagnostic tool. This has led to more accurate cyst classification and correct course of action for treatments that are cyst specific. In the past, before imaging scans or tests were available, medical professionals could only diagnose cysts via exploratory surgery.

Epidermoid cysts are usually diagnosed when a person notices a bump on their skin and seeks medical attention. The definitive diagnosis is made after excision by a pathologist based on microscopic appearance of a cystic lesion lined by cornified epithelium containing lamellated keratin without calcifications. They can also be seen as isointense lesions on MRI or hyperintensities on FLAIR.

Diagnosis is principally by MRI. Frequently, arachnoid cysts are incidental findings on MRI scans performed for other clinical reasons. In practice, diagnosis of symptomatic arachnoid cysts requires symptoms to be present, and many with the disorder never develop symptoms.

Additional clinical assessment tools that can be useful in evaluating a patient with arachnoid cysts include the mini-mental state examination (MMSE), a brief questionnaire-based test used to assess cognition.

Most cysts are discovered as a chance finding on routine dental radiography. On an x-ray, cysts appear as radiolucent (dark) areas with radiopaque (white) borders. Cysts are usually unilocular, but may also be multilocular. Sometimes aspiration is used to aid diagnosis of a cystic lesion, e.g. fluid aspirate from a radicular cyst may appear straw colored and display shimmering due to cholesterol content. Almost always, the cyst lining is sent to a pathologist for histopathologic examination after it has been surgically removed. This means that the exact diagnosis of the type of cyst is often made in retrospect.

Colloid cysts can be diagnosed by symptoms presented. Additional testing will be required and the colloid cyst symptoms can resemble those of other diseases. MRI and CT scans are often used to confirm diagnosis.

A neurosurgeon may open a portion of the body and insert a shunt into cerebral spinal fluid (CSF) filled cysts to allow drainage into CSF pathways. The fluid from the cyst is then drained into the abdomen, the body reabsorbs the fluid (reabsorption of fluid does not cause any harm). This type of surgical treatment is often performed to relieve pressure on the brain from a cyst within the cerebral cortex.

Clinical features can be found in the subhyoid portion of the tract and 75% present as midline swellings. The remainder can be found as far lateral as the lateral tip of the hyoid bone.

Typically, the cyst will move upwards on protrusion of the tongue, given its attachment to the embryonic duct, as well as on swallowing, due to attachment of the tract to the foramen caecum.

Diagnosis of a thyroglossal duct cyst requires a medical professional, and is usually done by a physical examination. It is important to identify whether or not the thyroglossal cyst contains any thyroid tissue, as it can define the degree of cyst that is being dealt with.

Diagnostic procedures for a thyroglossal cyst include:

Sebaceous cysts generally do not require medical treatment. However, if they continue to grow, they may become unsightly, painful, infected, or all of the above.

Treatment for dermoid cyst is complete surgical removal, preferably in one piece and without any spillage of cyst contents. Marsupialization, a surgical technique often used to treat pilonidal cyst, is inappropriate for dermoid cyst due to the risk of malignancy.

The association of dermoid cysts with pregnancy has been increasingly reported. They usually present the dilemma of weighing the risks of surgery and anesthesia versus the risks of untreated adnexal mass. Most references state that it is more feasible to treat bilateral dermoid cysts of the ovaries discovered during pregnancy if they grow beyond 6 cm in diameter.

Treatment ranges from simple enucleation of the cyst to curettage to resection. There are cysts—e.g., buccal bifurcation cyst—that resolve on their own, in which just close observation may be employed, unless it is infected and symptomatic.

A small dermoid cyst on the coccyx can be difficult to distinguish from a pilonidal cyst. This is partly because both can be full of hair. A pilonidal cyst is a pilonidal sinus that is obstructed. Any teratoma near the body surface may develop a sinus or a fistula, or even a cluster of these. Such is the case of Canadian Football League linebacker Tyrone Jones, whose teratoma was discovered when he blew a tooth out of his nose.

Cysts can be removed by excision.

In case of fronto-ethmoidal epidermoid cysts, surgical resection appears to be the mainstay of treatment; however, the extent of resection is dictated by adherence of the tumor capsule to the surrounding vital structures.

Hydrogen peroxide gel (HO) was previously recommended for cyst treatment, particularly those on body piercings. However the gel cannot adequately permeate the cyst and was not found to be effective. Hydrogen peroxide is no longer recommended for wound care by doctors as it can damage the healing tissues.

On body piercings, self treatment with a hot saline soak to help drain the cyst and the use of an antibacterial or medicated talcum powder (Use of talc is no longer recommended due to recently discovered associations with multiple cancers.) to help dry out the bump and reduce bacterial proliferation is generally recommended until medical advice can be obtained. Piercings, however, are more likely to be victims of hypertrophic scarring than a cyst. Cheek piercings seem to be the piercing most prone to cysts due to the possible interruption of saliva ducts.

Treatment ranges from simple enucleation of the cyst to curettage to resection. For example, small radicular cyst may resolved after successful endodontic ("root-canal") treatment. Because of high recurrence potential and aggressive behaviour, curettage is recommended for keratocyst. However, the conservative enucleation is the treatment of choice for most odontogenic cysts. The removed cyst must be evaluated by pathologist to confirm the diagnosis, and to rule out other neoplastic lesions with similar clinical or radiographic features (e.g., cystic or solid ameloblastoma, central mucoepidermoid carcinoma). There are cysts, e.g. buccal bifurcation cyst with self-resolation nature, in which close observation can be employed unless the cyst is infected and symptomatic.

The prognosis depends upon the type, size and location of a cyst. Most cysts are entirely benign, and some may require no treatment. Rarely, some cystic lesions represent locally aggressive tumors that may cause destruction of surrounding bone if left untreated. This type of cyst are usually removed with a margin of healthy bone to prevent recurrence of new cysts. If a cyst expands to a very large size, the mandible may be weakened such that a pathologic fracture occurs.

Most arachnoid cysts are asymptomatic, and do not require treatment. Where complications are present, leaving arachnoid cysts untreated, may cause permanent severe neurological damage due to the progressive expansion of the cyst(s) or hemorrhage (bleeding). However, with treatment most individuals with symptomatic arachnoid cysts do well.

More specific prognoses are listed below:

- Patients with impaired preoperative cognition had postoperative improvement after surgical decompression of the cyst.

- Surgery can resolve psychiatric manifestations in selected cases.

A pilonidal cyst can resemble a dermoid cyst, a kind of teratoma (germ cell tumor). In particular, a pilonidal cyst in the gluteal cleft can resemble a sacrococcygeal teratoma. Correct diagnosis is important because all teratomas require complete surgical excision, if possible without any spillage, and consultation with an oncologist.

The clinical management of a cyst of Montgomery depends upon the symptoms of the patient.

If there are no signs of infection, a cyst of Montgomery can be observed, because more than 80% resolve spontaneously, over only a few months. However, in some cases, spontaneous resolution may take up two years. In such cases, a repeat ultrasonography may become necessary. If, however, the patient has signs of an infection, for example reddening (erythema), warmth, pain and tenderness, a treatment for mastitis can be initiated, which may include antibiotics and non-steroidal anti-inflammatory drugs (NSAIDs). With treatment, inflammatory changes usually disappear quickly. In rare cases, drainage may become necessary. A surgical treatment of a cyst of Montgomery, i.e. a resection, may become necessary only if a cyst of Montgomery persists, or the diagnosis is questioned clinically.

The prognosis seems to be excellent. In one series, all adolescent patients with a cyst of Montgomery had a favourable outcome.

Surgical excision of a sebaceous cyst is a simple procedure to completely remove the sac and its contents.

There are three general approaches used: traditional wide excision, minimal excision, and punch biopsy excision.

The typical outpatient surgical procedure for cyst removal is to numb the area around the cyst with a local anaesthetic, then to use a scalpel to open the lesion with either a single cut down the center of the swelling, or an oval cut on both sides of the centerpoint. If the cyst is small, it may be lanced instead. The person performing the surgery will squeeze out the keratin surrounding the cyst, then use blunt-headed scissors or another instrument to hold the incision wide open while using fingers or forceps to try to remove the cyst intact. If the cyst can be removed in one piece, the "cure rate" is 100%. If, however, it is fragmented and cannot be entirely recovered, the operator may use curettage (scraping) to remove the remaining exposed fragments, then burn them with an electro-cauterization tool, in an effort to destroy them in place. In such cases the cyst may recur. In either case, the incision is then disinfected and, if necessary, the skin is stitched back together over it. A scar will most likely result.

An infected cyst may require oral antibiotics or other treatment before or after excision. If pus has already formed then incision and drainage should be done along with avulsion of cyst wall with proper antibiotics coverage.

An approach involving incision, rather than excision, has also been proposed.

A cyst of Montgomery may be asymptomatic. Yet, a cyst of Montgomery usually is diagnosed when a female patient, 10–20 years of age, complains to a healthcare professional of breast pain (mastalgia), inflammation or a palpable nodule in the breast. The diagnosis is made clinically, when a palpable nodule is felt in the retroareolar area.

The diagnosis can be confirmed with ultrasonography, frequently showing a simple cyst in the retroareolar area. In some patients, multiple cysts or bilateral cysts may exist. Cysts of Montgomery may have liquid content with an echogenic or calcific sediment.

Multiple studies have been found on how to remove a colloid cyst. One is an endoscopic removal. To remove the cyst, make a small incision. The endoscope is inserted into the brain and then moved toward the tumor in the ventricular compartment. The tumor is hit with an electric current. The interior of the cyst is removed followed by the cyst wall. The electric current is then used to kill the remaining pieces of the cyst. This whole process, including closing of the incision and removal of the scope is completed within 45 minutes to an hour. The patients are able to leave the hospital after 1 or 2 days. A case was done with the absence of ventriculomegaly that has been contraindication in an endoscopic removal. The study found that with normal-sized ventricles are not a contraindication. They actually have comparable or less complication rates. Another study experimented with a smaller retractor tube, 12 mm instead of 16–22 mm. The study found that using a 12 mm tube on a 10 mm colloid cyst. The surgery was successful in removing the cyst with a smaller retractor tube for resection while minimizing injury. The surgery had potential for improving outcomes.

Neuroendoscopic third ventriculostomy during surgery can be used to prevent further hydrocephalus post op. This removes the need for insertion of bilateral shunts.

Surgical excision is required to treat a trichilemmal cyst. The method of treatment varies depending on the physician's training. Most physicians perform the procedure under local anesthetic. Others prefer a more conservative approach. This involves the use of a small punch biopsy about 1/4 the diameter of the cyst. The punch biopsy is used to enter the cyst cavity. The content of the cyst is emptied, leaving an empty sac. As the pilar cyst wall is the thickest and most durable of the many varieties of cysts, it can be grabbed with forceps and pulled out of the small incision. This method is best performed on cysts larger than a pea which have formed a thick enough wall to be easily identified after the sac is emptied. Small cysts have walls that are thin, and easily fragmented on traction. This increases the likelihood of cyst recurrence. This method often results in only a small scar, and very little if any bleeding.

Nasopalatine duct cysts usually present as asymptomatic palatal swellings, but they may rarely be accompanied by pain and/or purulent discharge. The cysts are generally treated by .

The aneurysmal bone cyst is a neoplastic cyst, more specifically, an aggressive lesion with radiographic cystic appearance.

The standard treatment of COC is enucleation and curettage (E&C). Recurrence following E&C is rare.