Osteoarthritis (OA) is a widespread chronic joint disease characterized by articular cartilage destruction and accompanied by pain and disability. In this study, we found that the expression of Insulin-like Growth Factor II (IGF-II) was reduced in articular cartilage in human OA patients as well as in the murine experimental OA model of destabilization of the medial meniscus (DMM). In primary human articular chondrocytes, ectopic expression of lentiviral IGF-II inhibited pro-inflammatory cytokine IL-1β-induced NF-κB activation as well as catabolic gene expression. Interestingly, IGF-II did not significantly alter the phosphorylation states of ERK1/2 or Akt, which are kinases typically activated by IGF-I. Instead, it induced the activity of phospholipase C (PLC) and a PLC inhibitor blocked the inhibitory activity of IGF-II against IL-1β, suggesting that this activity is mediated through PLC. Furthermore, IGF-II increased cartilage matrix levels and decreased MMP13 protein expression in explanted human OA cartilage cultures in vitro. In the in vivo DMM model, intraarticular injection of lentiviral IGF-II led to enhanced cartilage matrix levels and decreased MMP13 protein expression, as well as reduced osteophyte formation and subchondral bone sclerosis. Therefore, our results suggest that IGF-II can promote cartilage integrity and halt knee joint destruction in OA.