A cyclops lesion can be a complication of anterior cruciate ligament surgery. If the new replacement ligament is too large for the notch in the femur within which it sits, the fibrous tissue of the new ligament can be slowly stripped away, bundling itself up into a considerable lump like a tumour. It can jam up the 'intercondylar notch', preventing the knee from fully straightening. The lump sometimes looks like the central eye of the mythical 'cyclops' monster, hence the name.
The term has been extended to include a similar obstruction of the notch by the damaged ligament itself, rather than from the reconstructed ligament.
To avoid the development of a cyclops lesion, the knee surgeon often performs a 'notchplasty' where a burr is used to widen the notch and allow more room for the new ligament.
If a cyclops lesion does occur, the surgeon needs to go back into the knee and remove the lump, and all should then be well.