Interleukin-1β (IL-1β)-induced inflammatory responses in chondrocytes play an important role in the pathogenesis of osteoarthritis (OA). Searching medicines that affect IL-1β-mediated chondrocytes function is critical in developing therapies for OA. Paeonol, as an important component in traditional Chinese medicine, has anti-inflammatory activity and can offer therapy for a multitude of inflammatory-related diseases. The purpose of this study was to investigate whether paeonol could alleviate the progression of OA through inhibition of IL-1β-induced inflammatory responses in chondrocytes. The cell counting kit-8 assay, 5-ethynil-2′-deoxyuridine staining, hoechst 33258 staining and flow cytometric staining were used to observe the chondrocytes proliferation and apoptosis. Western blot and quantitative real-time PCR were applied to examine the expression of extracellular matrix and cartilage degrading enzymes. Reactive oxygen species (ROS) production was monitored by 2′,7′-dichlorodihydrofluoresce in diacetate staining. Furthermore, paeonol was intra-articularly injected into joint capsule in destabilized medial meniscus (DMM)-induced OA rat model for 8 and 12 weeks. The results showed that paeonol could negatively affect IL-1β-mediate chondrocyte apoptosis and proliferation. Application of paeonol attenuated the secretion of cartilage extracellular matrix and cartilage degrading enzymes induced by IL-1β in chondrocytes. Increasing of ROS production by IL-1β was obviously alleviated by paeonol. Besides, paeonol alleviated DMM-induced articular cartilage degeneration in vivo. Taken together, we concluded that paeonol might be used as therapeutic agent for treating OA.