This paper explores indentation-triggered microstructural instability in hyperelastic cellular solids through combined experimental, numerical, and theoretical efforts. The results demonstrate that when the indentation depth is greater than a critical value, local instability occurs and further propagates into a rectangular region beneath the indenter. The width of the rectangular region scales with the contact width, and we propose a simple scaling relation to estimate the maximum depth to which the instability can propagate based on the elastic contact theory. The results reported here may find such applications as in the integrity evaluation of soft cellular materials and structures and the development of advanced functional materials with unique optical, acoustic and wetting properties.