Background We explored the therapeutic effects of Adipose‐derived mesenchymal stem cells (ADMSCs) and Synovial‐derived mesenchymal stem cells (SDMSCs) on osteoarthritis (OA). Methods SDMSCs and ADMSCs were co‐cultured with chondrocytes and stimulated with interleukin (IL)‐1β. An OA model was established on rats by intra‐articular injection with ADMSCs and SDMSCs. After 8 weeks, the joint diameter difference was detected, and histological staining was used to observe the pathological changes in cartilage tissue. Enzyme‐linked immunosorbent assay (ELISA) was used to detect the expressions of IL‐6, tumor necrosis factor (TNF)‐α and IL‐1β in joint fluid. The expressions of COL2A1, Aggrecan, Matrix metalloproteinase (MMP)‐13, SOX9, IL‐6, TNF‐α and IL‐1β were detected by qRT‐PCR and Western blotting in cartilage tissue. Reactive oxygen species (ROS) content in cells and cartilage tissues was detected by ROS kit. Results SDMSCs and ADMSCs co‐cultured with chondrocytes could reduce MMP‐13 expression, increase the expressions of COL2A1, Aggrecan and SOX9, as well as reverse the effects of IL‐1β on promoting ROS content and inflammatory factors levels. After the OA model was established, the injection of ADMSCs and SDMSCs reduced the differences in joint diameter and tissue lesions in OA rats. The OA model led to increased levels of IL‐6, TNF‐α and IL‐1β in joint fluid and cartilage tissue, while the injection of ADMSCs and SDMSCs inhibited the inflammatory factor levels in OA rats, and increased the expressions of COL2A1, Aggrecan and SOX9 in OA rats. Conclusion ADMSCs and SDMSCs improve osteoarthritis in rats by reducing chondrocyte ROS and inhibiting inflammatory response.