Inflammation and tissue degeneration play key roles in numerous rheumatic diseases, including osteoarthritis (OA). Efforts to reduce and effectively repair articular cartilage damage in an osteoarthritic environment are limited in their success due to the diseased environment. Treatment strategies focused on both reducing inflammation and increasing tissue production are necessary to effectively treat OA from a tissue-engineering perspective. In this work, we investigated the anti-inflammatory and tissue production capacity of a small molecule 3,4,6-O-tributanoylated-N-acetylglucosamine (3,4,6-O-Bu3GlcNAc) previously shown to inhibit the nuclear factor κB (NFκB) activity, a key transcription factor regulating inflammation. To mimic an inflammatory environment, chondrocytes were stimulated with interleukin-1β (IL-1β), a potent inflammatory cytokine. 3,4,6-O-Bu3GlcNAc exposure decreased the expression of NFκB target genes relevant to OA by IL-1β-stimulated chondrocytes after 24 h of exposure. The capacity of 3,4,6-O-Bu3GlcNAc to stimulate extracellular matrix (ECM) accumulation by IL-1β-stimulated chondrocytes was evaluated in vitro utilizing a three-dimensional hydrogel culturing system. After 21 days, 3,4,6-O-Bu3GlcNAc exposure induced quantifiable increases in both sulfated glycosaminoglycan and total collagen. Histological staining for proteoglycans and type II collagen confirmed these findings. The increased ECM accumulation was not due to the hydrolysis products of the small molecule, n-butyrate and N-acetylglucosamine (GlcNAc), as the isomeric 1,3,4-O-tributanoylated N-acetylglucosamine (1,3,4-O-Bu3GlcNAc) did not elicit a similar response. These findings demonstrate that a novel butanoylated GlcNAc derivative, 3,4,6-O-Bu3GlcNAc, has the potential to stimulate new tissue production and reduce inflammation in IL-1β-induced chondrocytes with utility for OA and other forms of inflammatory arthritis.