Instability is a significant concern in total hip arthroplasty (THA), particularly when there is structural compromise of the capsule due to pre-existing pathology or due to necessities of surgical approach. An experimentally grounded fiber-direction-based finite element model of the hip capsule was developed, and was integrated with an established three-dimensional model of impingement/dislocation. Model validity was established by close similarity to results from a cadaveric experiment in a servohydraulic hip simulator. Parametric computational runs explored effects of graded levels of capsule thickness, of regional detachment from the capsule's femoral or acetabular insertions, of surgical incisions of capsule substance, and of capsule defect repairs. Depending strongly upon the specific site, localized capsule defects caused varying degrees of construct stability compromise, with several specific situations involving over 60% decrement in dislocation resistance. Construct stability was returned substantially toward intact-capsule levels following well-conceived repairs, although the suture sites involved were often at substantial risk of failure. These parametric model results underscore the importance of retaining or robustly repairing capsular structures in THA, in order to maximize overall construct stability.