An endoscopic tool utilizes a fiber optic system for illuminating and imaging ligaments or other tissue which are to be cut. Illumination and imaging is performed above a lateral opening at the distal end of a probe that is inserted into an incision point. Preferably, a two edged blade which can be moved in both the distal to proximal direction and the proximal to distal direction is selectively deployable from of the lateral opening at the distal end of the probe. The endoscopic tool is small in size, and preferably includes a pencil grip with a button actuator for deploying the two edged cutting blade. A wire actuator that fits into a slot in the bottom of the deployable blade, can be nested with the fiber optic cable such that the cross sectional area of the probe is reduced. Alternatively, a tube concentric with the fiber optic cable can be used as the mechanism for actuating the blade or other device. The surgeon can observe cutting of the ligament or other tissue as he moves the endoscopic tool in either or both the forward or reverse direction on a display screen which is operatively connected to the fiber optic system. A retractor can be used in conjunction with the endoscopic tool to lift tissue where dissection is desired, and to function as a guide for the blade.