Presence of an arachnoid cyst at craniospinal junction is not very common. This is a very rare anatomic site, with only seven other cases reported in the literature. We report a case of large intradural craniospinal arachnoid cyst presenting with obstructive hydrocephalus and cranial nerve palsy. A 39-year-old male presented with 8-month history of neck pain, headache, vomiting, visual disturbances, diminished taste sensation, and numbness of face. He had bilateral papilledema on ophthalmoscopy. Magnetic resonance imaging (MRI) revealed a posterior fossa arachnoid cyst extending down to the lower border of C5 vertebra. Posterior decompression was done through C5 laminectomy. He made a full recovery and was asymptomatic at 6-month follow-up examination. The clinical features, diagnosis, and management of these rare craniospinal arachnoid cysts are discussed.