Joint injury dramatically enhances the onset of osteoarthritis (OA) and is responsible for an estimated 12% of OA. Posttraumatic arthritis (PTA) is especially common after intra-articular fracture, and no disease-modifying therapies are currently available. We hypothesized that the delivery of mesenchymal stem cells (MSCs) would prevent PTA by altering the balance of inflammation and regeneration after fracture of the mouse knee. Additionally, we examined the hypothesis that MSCs from the MRL/MpJ (MRL) "superhealer" mouse strain would show increased multilineage and therapeutic potentials as compared to those from C57BL/6 (B6) mice, as MRL mice have shown exceptional in vivo regenerative abilities. A highly purified population of MSCs was prospectively isolated from bone marrow using cell surface markers (CD45-/TER119-/PDGFRα+/Sca-1+). B6 MSCs expanded greater than 100,000-fold in 3 weeks when cultured at 2% oxygen and displayed greater adipogenic, osteogenic, and chondrogenic differentiation as compared to MRL MSCs. Mice receiving only a control saline injection after fracture demonstrated PTA after 8 weeks, but the delivery of 10,000 B6 or MRL MSCs to the joint prevented the development of PTA. Cytokine levels in serum and synovial fluid were affected by treatment with stem cells, including elevated systemic interleukin-10 at several time points. The delivery of MSCs did not reduce the degree of synovial inflammation but did show increased bone volume during repair. This study provides evidence that intra-articular stem cell therapy can prevent the development of PTA after fracture and has implications for possible clinical interventions after joint injury before evidence of significant OA.