Osteoarthritis (OA), being the most prominent degenerative joint disease is affecting millions of elderly people worldwide. Although Andrographis paniculata is an ethnic medicine with a long history of being used as analgesic agent, no study using a monosodium iodoacetate (MIA) model has investigated its potential activities against OA. In this study, experimental OA was induced in rats with a knee injection of MIA, which represents the pathological characteristics of OA in humans. A. paniculata extract (APE) substantially reversed the loss of hind limb weight-bearing and the cartilage damage resulted from the OA induction in rats. Additionally, the levels of serum pro-inflammatory cytokines, such as IL-1β, IL-6, and TNF-α as well as the concentration of matrix metalloproteinases, including MMP-1, MMP-3, MMP-8, and MMP-13 were decreased by APE administration. Acetic acid-induced writhing responses in mice which quantitatively measure pain were significantly reduced by APE. In vitro, APE inhibited the generation of NO and downregulated the expression of IL-1β, IL-6, COX-2, and iNOS in lipopolysaccharide (LPS)-stimulated RAW264.7 cells. The above results suggest the potential use APE as a therapeutic agent against OA.