Dr. Peter Gott answered the question in his online column:
DEAR READER: A Baker's cyst is an accumulation of joint fluid behind the knee. Most cysts do not cause symptoms, but, occasionally, large cysts may cause discomfort and/or stiffness. In fact, most cysts are recognized only after they rupture, a process that can cause pain, swelling and bruising.
Baker's cysts can occur in anyone of any age. The most common cause in older people is arthritis. Your cyst has probably been there for a while but was worsened by further injury.
Treatment is usually aimed at repairing the underlying cause. In your case, that would be the arthritis. I hope you misunderstood your orthopedist when he recommended a knee replacement. It is not appropriate therapy to treat a Baker's cyst; knee replacement would certainly help your arthritic knee, however.
Most Baker's cysts disappear on their own, but, depending on the cause and severity, it can take months or perhaps even years for that to happen. For those that cause severe pain and interfere with normal movement, there are a few treatments available. The most common is aspiration, in which a physician drains the cyst with a needle and syringe.
Very rarely, it may be necessary to remove the cyst surgically. This is avoided as much as possible because of the risk of damaging surrounding tissue, blood vessels and nerves located behind the knee.
I recommend you get a second opinion and start treating your arthritis, which should help resolve the cyst.